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Do Developing Countries Invest Up? The Environmental Effects of Foreign Direct Investment from Less-Developed Countries

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  • Zeng, Ka
  • Eastin, Joshua
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    Abstract

    This paper examines the environmental effects of foreign direct investment (FDI) from less-developed countries (LDC). We hypothesize that rather than transferring poor home-country practices across borders, LDC FDI can increase the level of environmental stewardship of host-country firms. We contend that LDC firms find it increasing financially advantageous to signal to consumers, investors, and potential business partners their commitment to environmental protection by adopting sound environmental practices. Furthermore, this behavior can create spillover effects to other host-country firms, leading these firms to also boost their environmental credentials. Our empirical findings lend support to these conjectures.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X12000459
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    Bibliographic Info

    Article provided by Elsevier in its journal World Development.

    Volume (Year): 40 (2012)
    Issue (Month): 11 ()
    Pages: 2221-2233

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    Handle: RePEc:eee:wdevel:v:40:y:2012:i:11:p:2221-2233

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    Web page: http://www.elsevier.com/locate/worlddev

    Related research

    Keywords: FDI; environment; ISO 14001; LDC;

    References

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    Cited by:
    1. Chandran, V.G.R. & Tang, Chor Foon, 2013. "The impacts of transport energy consumption, foreign direct investment and income on CO2 emissions in ASEAN-5 economies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 24(C), pages 445-453.

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