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In Search of Environmental Spillovers

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  • Facundo Albornoz
  • Matthew A. Cole
  • Robert J. R. Elliott
  • Marco G. Ercolani

Abstract

There is an extensive literature that examines the relationship between foreign direct investment (FDI) and the productivity and competitiveness of domestic firms. Using estimation techniques from the productivity spillover literature, this paper tests for the presence of environmental spillovers from foreign firms. On the basis that foreign-owned firms may encourage firms in their extended supply chain to improve their environment-related management practices, evidence for the existence of environmental spillovers should be easier to find than productivity spillovers where firms naturally attempt to minimise intra-industry knowledge leakage. In this paper we show that, first, foreign-owned firms are more likely to implement environmental management systems (EMS) and, second, that the presence of foreign-owned firms in those sectors that a firm supplies can encourage good environmental practice. This is especially true if a firm is foreign, has high absorptive capacity, and operates in the presence of formal and informal networks. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal World Economy.

Volume (Year): 32 (2009)
Issue (Month): 1 (01)
Pages: 136-163

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Handle: RePEc:bla:worlde:v:32:y:2009:i:1:p:136-163

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References

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Citations

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Cited by:
  1. Matthew A. Cole & Robert J R Elliott & Toshihiro Okubo & Ying Zhou, 2012. "The Carbon Dioxide Emissions of Firms: A Spatial Analysis," Keio/Kyoto Joint Global COE Discussion Paper Series 2012-003, Keio/Kyoto Joint Global COE Program.
  2. Svetlana Batrakova & Ronald B Davies, 2010. "Is there an environmental benefit to being an exporter? Evidence from firm level data," Working Papers 201007, School Of Economics, University College Dublin.
  3. Emma Aisbett, 2010. "Powerful Multinational or Persecuted Foreigners: ‘Foreignness’ and Influence over Government," CEPR Discussion Papers 638, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  4. Elliott, Robert J.R. & Sun, Puyang & Chen, Siyang, 2013. "Energy intensity and foreign direct investment: A Chinese city-level study," Energy Economics, Elsevier, vol. 40(C), pages 484-494.
  5. Hübler, Michael & Glas, Alexander, 2013. "The energy-bias of North-South technology spillovers: A global, bilateral, bisectoral trade analysis," ZEW Discussion Papers 13-031, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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