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Pollution Haven Hypothesis And Foreign Direct Investment: Evidence From Selected Asian Countries (Hypotéza Ekologického Neokolonializmu A Priame Zahraničné Investície: Dôkazy Z Vybraných Ázijských Štátov)

Author

Listed:
  • Zahra Nasrollahi

    (Department of Economics, University of Yazd)

  • Mahvash Moradi

    (Department of Economics, University of Yazd)

  • Hadi Rezaei

    (Department of Economics, Lorestan University)

Abstract

The past decade has seen a trend of accelerating environmental degradation such as increasing greenhouse gas emissions, deforestation and loss of biodiversity. Such patterns of environmental destruction have been driven by increased economic activity, of which Foreign Direct Investment (FDI) has become an increasingly significant contributor. Governments have removed many restrictions on trade and eased environmental rules in developing countries, leading multinationals to flock in and take advantage of these liberalized trade rules. The question is posed as to whether this process is more of a threat for countries which accept FDI or not. The present paper tests the pollution haven hypothesis by employing a panel data on FDI inflows in five Asian countries for the period from 1990 to 2011. Results show support for the idea that investors favor lax environmental regulation when making FDI location decisions and also suggest the validity of Environmental Kuznets Curve (EKC) hypothesis. (V uplynulom desaťročí sme mohli sledovať trend zrýchľujúcej degradácie životného prostredia, prejavujúci sa emisiami skleníkových plynov, odlesnením a stratou biodiverzity. Tieto vzorce ničenia životného prostredia vyvolala zvýšená ekonomická aktivita, ktorej významným determinantom boli priame zahraničné investície (PZI). Vlády odstránili mnohé prekážky medzinárodného obchodu a zjednodušili ekologické normy v rozvojových štátoch, čo využili nadnárodné spoločnosti. Našou otázkou v predkladanom článku je, či tento proces predstavuje pre prijímateľov PZI hrozbu. Panelovou analýzou dát overujeme hypotézu ekologického neokolonializmu na údajoch za 5 ázijských štátov od roku 1990 do roku 2011. Výsledky podporujú záver, že investori pri voľbe lokality uprednostňujú laxné environmentálne normy a poukazujú na platnosť hypotézy o environmentálnej Kuznetsovej krivke.)

Suggested Citation

  • Zahra Nasrollahi & Mahvash Moradi & Hadi Rezaei, 2014. "Pollution Haven Hypothesis And Foreign Direct Investment: Evidence From Selected Asian Countries (Hypotéza Ekologického Neokolonializmu A Priame Zahraničné Investície: Dôkazy Z Vybraných Ázijských Štá," Medzinarodne vztahy (Journal of International Relations), Ekonomická univerzita, Fakulta medzinárodných vzťahov, vol. 12(2), pages 111-124.
    • Handle: RePEc:brv:journl:v:12:y:2014:i:2:p:111-124
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    References listed on IDEAS

    as
    1. Judith M. Dean, 2002. "Does trade liberalization harm the environment? A new test," Canadian Journal of Economics, Canadian Economics Association, vol. 35(4), pages 819-842, November.
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    More about this item

    Keywords

    foreign direct investment; pollution haven hypothesis; environmental degradation; Environmental Kuznets Curve; panel data analysis;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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