A Panel Study of the Pollution-Haven Hypothesis
Abstract
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.Download Info
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Bibliographic Info
Article provided by De Gruyter in its journal Global Economy Journal.
Volume (Year): 9 (2009)
Issue (Month): 1 ()
Pages: 2
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Web page: http://www.degruyter.com
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Web: http://www.degruyter.com/view/j/gej
Related research
Keywords: pollution-haven hypothesis; foreign direct investment; environmental regulations;References
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