The aim of this paper is to explore two apparently unrelated issues - regional trade agreements and the pollution-haven hypothesis. They are linked by the belief that the elimination of trade barriers will further encourage firms already considering a move to countries with weak environmental regulations. Given the proliferation of trade agreements, as well as the movement of environmental issues to the forefront of our political process, a better understanding of the policy effects is needed. We apply a test equation loosely based on the gravity model to a data set of industry-level foreign direct investment from the Unites States to 23 partner countries from 1982 to 1999. Using pollution emissions as a proxy for environmental stringency, we find strong evidence in support of the pollution-haven hypothesis. We also find the NAFTA increase outflows of U.S. FDI. Finally, the NAFTA appears to encourage the pollution-haven effect.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Article provided by International Trade and Finance Association in its journal Global Economy Journal.
Volume (Year): 6 (2007) Issue (Month): 3 () Pages: 3 Download reference. The following formats are available: HTML,
plain text,
BibTeX,
RIS (EndNote),
ReDIF
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: