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In Search of Environmental Spillovers

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

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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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File URL: http://www.blackwell-synergy.com/links/doi/10.1111/j.1467-9701.2009.01160.x
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Publisher Info
Article provided by Blackwell Publishing 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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  3. Kokko, Ari, 1994. "Technology, market characteristics, and spillovers," Journal of Development Economics, Elsevier, vol. 43(2), pages 279-293, April. [Downloadable!] (restricted)
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  6. FERES José & REYNAUD Arnaud, 2006. "Does Formal or Informal Environmental Regulation have an Impact on Costs? An Empirical Analysis of the Brazilian," Working Papers 06.16.209, LERNA, University of Toulouse. [Downloadable!]
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  8. Beata Javorcik & Shang-Jin Wei, 2005. "Pollution Havens and Foreign Direct Investment: Dirty Secret or Popular Myth?," Contributions to Economic Analysis & Policy, Berkeley Electronic Press, vol. 3(2), pages 1244-1244. [Downloadable!] (restricted)
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  11. Arora Seema & Cason Timothy N., 1995. "An Experiment in Voluntary Environmental Regulation: Participation in EPA's 33/50 Program," Journal of Environmental Economics and Management, Elsevier, vol. 28(3), pages 271-286, May. [Downloadable!] (restricted)
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  17. Richard Harris & Qian Cher Li, 2009. "Exporting, R&D, and absorptive capacity in UK establishments," Oxford Economic Papers, Oxford University Press, vol. 61(1), pages 74-103, January. [Downloadable!] (restricted)
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  23. Haddad, Mona & Harrison, Ann, 1993. "Are there positive spillovers from direct foreign investment? : Evidence from panel data for Morocco," Journal of Development Economics, Elsevier, vol. 42(1), pages 51-74, October. [Downloadable!] (restricted)
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