Pollution Haven with Technological Externalities Arising from Foreign Direct Investment

2013 ◽  
Vol 57 (1) ◽  
pp. 1-18 ◽  
Author(s):  
Ki-Dong Lee ◽  
Woohyung Lee ◽  
Kichun Kang
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Pollution Haven ◽  
Technological Externalities

Investigation of the Foreign Direct Investment and Environmental Pollution Nexus for Developing Countries

2021 ◽  
pp. 320-338
Author(s):  
Orkun Çelik ◽  
Özge Korkmaz ◽  
Zafer Adalı
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Environmental Pollution ◽  
Direct Investment ◽  
Panel Cointegration ◽  
Cointegration Test ◽  
Annual Data ◽  
Pollution Haven ◽  
Panel Cointegration Test

In theory, the foreign direct investment and environmental pollution nexus is explained by three hypotheses. Firstly, pollution haven hypothesis assumes that there is a positive nexus between these variables. Secondly, pollution halo hypothesis supposes that there is negative connection between these variables. Lastly, neutrality hypothesis asserts the non-existence of the connection between these variables. In recent years, many researchers have frequently tested whether these hypotheses are valid for different countries. In this study, applying Westerlund panel cointegration test, the authors aim to explore the nexus between foreign direct investment and environmental pollution for 23 developing countries after global crisis. For this aim, they use annual data covering the period 2009-2019. According to the obtained empirical findings, the presence of the long-term nexus between foreign direct investment and environmental pollution is not detected for 23 developing countries. Accordingly, the authors can say that there is neutrality hypothesis.

A Panel Study of the Pollution-Haven Hypothesis

2009 ◽  
Vol 9 (1) ◽  
pp. 1850154 ◽  
Author(s):  
Raymond MacDermott
Keyword(s):  
Foreign Direct Investment ◽  
Interest Rates ◽  
Direct Investment ◽  
Fixed Effects ◽  
Environmental Regulations ◽  
Panel Study ◽  
Pollution Haven Hypothesis ◽  
Data Set ◽  
Pollution Haven ◽  
Pollution Emissions

This paper tests the pollution-haven hypothesis. A fixed-effects variation of the gravity model is applied to panel data to investigate what relationship, if any, exists between environmental regulations and FDI. The data set focuses on bilateral flows of aggregated foreign direct investment between 26 OECD countries from 1982 to 1997. Use of pollution emissions as a proxy for environmental stringency shows evidence in support of the pollution-haven hypothesis. In other words, firms do seek out countries with weaker environmental regulations for production. In addition, FDI appears to fall with distance. Contrary to expectations, FDI is not influenced by interest rates, wages or GDP.

scholarly journals Environmental Regulation and Foreign Direct Investment: Evidence from China’s Eleventh and Twelfth Five-Year Plans

2020 ◽  
Vol 12 (6) ◽  
pp. 2528 ◽  
Author(s):  
Yuqing Ge ◽  
Yucai Hu ◽  
Shenggang Ren
Keyword(s):  
Foreign Direct Investment ◽  
Environmental Policy ◽  
Environmental Regulation ◽  
Direct Investment ◽  
So2 Emissions ◽  
Negative Effects ◽  
Environmental Enforcement ◽  
Fdi Inflows ◽  
Pollution Haven ◽  
Pollution Haven Effect

This paper investigates environmental regulation and its impact on inward foreign direct investment (FDI) in developing countries. Based on the Chinese province-industry-level panel data in the period 2001 to 2015, we use a difference-in-difference-in-differences (DDD) model to evaluate pollution haven behavior in the context of China’s 11th and 12th Five-Year Plans SO2 emissions reduction policy. The results show that the policy leads to fewer FDI inflows to its highly-polluting industries in provinces with tougher pollution reduction targets. In addition, the environmental policy has significantly inhibited FDI inflows in provinces with stricter environmental enforcement, while investment in provinces with worse environmental enforcement is insensitive to environmental policy. These findings are consistent with pollution haven behavior. In contrast, FDI in industries with high levels of technology is not significantly influenced by the policy, whereas the FDI in industries with low levels of technology shows a negative response to environmental policy. This is overall evidence confirming a pollution haven effect (PHE), although technology differences could alleviate the negative effects of environmental regulation on inward FDI.

A meta-analysis of FDI and environmental regulations

2014 ◽  
Vol 20 (2) ◽  
pp. 185-208 ◽  
Author(s):  
Alief A. Rezza
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Research Design ◽  
Government Spending ◽  
Direct Investment ◽  
Environmental Regulations ◽  
Meta Analysis ◽  
Data Sets ◽  
Pollution Haven Hypothesis ◽  
Pollution Haven

AbstractPrevious authors have been unable to agree on whether environmental regulations hinder foreign direct investment (FDI). The empirical evidence in this domain remains inconclusive because of the contrasting results observed in the literature, owing to the differing characteristics of the data sets and models used in previous studies. The present study carries out a meta-analysis on a sample of published and unpublished papers on the so-called pollution haven hypothesis (PHH) in order to investigate whether certain aspects of research design affect the presented findings. The paper offers explanations for the mixed findings reported in the literature by suggesting that certain aspects of research design are crucial to explaining their significance. The PHH is more likely to be supported by studies that define FDI as the establishment of new plants and those that use government spending as a proxy for the strictness of environmental regulations. Moreover, focusing investigations on pollution-intensive industries or developing countries hardly increases the likelihood of achieving results that support the PHH.

scholarly journals Does Environmental Governance Matter for Foreign Direct Investment? Testing the Pollution Haven Hypothesis for Indian States

2018 ◽  
Vol 35 (1) ◽  
pp. 81-107 ◽  
Author(s):  
Vinish Kathuria
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Environmental Governance ◽  
Pollution Abatement ◽  
The State ◽  
Foreign Firms ◽  
Pollution Haven Hypothesis ◽  
Indian States ◽  
Industrial Composition ◽  
Pollution Haven

This paper attempts to examine the role of environmental governance on foreign direct investment by testing the pollution haven hypothesis for 21 Indian states for the period 2002–2010. To test for the hypothesis, this study computes an abatement expenditure index adjusted for industrial composition at the state level using Annual Survey of Industries plant-level data. The methodology used is based on that proposed by Levinson ( 2001 ). The index compares actual pollution abatement expenditures in a particular state, unadjusted for industrial composition, to predicted abatement expenditures in the same state. (The predictions are based on nationwide abatement expenditures by industry and each state's industrial composition.) If the adjusted index is low for a state, it implies that the state has poor environmental governance, which would be expected to induce foreign firms to invest. However, the results do not find any evidence of the pollution haven hypothesis in the Indian context. Other infrastructure and market-access-related variables are more important in influencing a foreign firm's investment decisions than environmental stringency.

The Impact of Foreign Direct Investment on CO2 Emission

2017 ◽  
pp. 81-92 ◽  
Author(s):  
Oguzhan Aydemir ◽  
Feyyaz Zeren
Keyword(s):  
Foreign Direct Investment ◽  
Co2 Emissions ◽  
Direct Investment ◽  
Panel Data Analysis ◽  
Panel Cointegration ◽  
Pollution Haven Hypothesis ◽  
Pollution Haven ◽  
Carbon Dioxide Co2 ◽  
The Impact ◽  
Pollution Halo Hypothesis

In the literature, the impact of Foreign Direct Investment (FDI) on carbon dioxide (CO2) emissions is explained by two different hypotheses: Pollution Halo and Pollution Haven Hypothesis. While Pollution Halo hypothesis states that FDI provides advanced technology to countries and accordingly decreases CO2 emissions, Pollution Haven Hypothesis indicates that there is a positive relationship between FDI and CO2. In this regard, in this study, the impact of FDI on CO2 emissions in the selected 10 of G-20 countries in the period of 1970-2010 is investigated by using panel data analysis. The empirical findings show that panels have cross-section dependence and these two panels are stationary in different levels. Moreover, the existence of long term relationship between panels is found by using Durbin Hausmann panel cointegration test. The results of the study also show that while Pollution Halo Hypothesis is valid for USA, France and Argentina, Pollution Haven Hypothesis is valid for UK, Canada, Australia, South Africa, Italy, Mexico and Saudi Arabia.

Technology Gap

2022 ◽  
pp. 415-438
Author(s):  
Ritu Rana ◽  
Manoj Sharma ◽  
Ajay Singh
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Energy Consumption ◽  
Direct Investment ◽  
Trade Openness ◽  
Research Work ◽  
Technology Gap ◽  
Trade Model ◽  
Pollution Haven ◽  
Information And Communication

This chapter extends the authors' previous research work in which an examination of causality was conducted between foreign direct investment (FDI), economic growth (GDP), and the environment (CO2 emissions and energy consumption [EC]) in the Indian context. Two more important variables (i.e., trade openness and technology gap) were also added. The chapter further examines the effects of information and communication technology (ICT) trade on both GDP and the environment of India. The results of previous model show that FDI is neither causing GDP nor is it bridging the technology gap. The results also indicate the existence of pollution haven hypothesis (PHH) in India as FDI is causing both CO2 and EC. Also, FDI is, though not causing the GDP directly, doing so indirectly through CO2 validating the existence of PHH. FDI is causing trade openness in India, but that openness is again causing more FDI, which is doing no good for India. The results of ICT trade model indicate that both GDP and ICT exports cause CO2 in India. Also, both the GDP and ICT exports are consuming energy in India.

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