The Effect of Environmental Regulation on the Locational Choice of Japanese Foreign Direct Investment
AbstractThis paper assesses the impact of environmental regulation in host countries on Japanese foreign direct investment (FDI) decision-making. It tests the pollution haven hypothesis using data on national environmental regulation standards and Japanese inward FDI in five dirty industries (iron and steel industry, non-ferrous metals industry, chemicals industry, paper and pulp industry, non-metallic products industry). The results do not support the pollution hypothesis. On the contrary, inward Japanese FDI appears to be attracted to countries which have committed themselves to a transparent and stable environment regulatory environment, suggesting that the quality of the regulatory framework in terms of its certainty and transparency has a greater influence on foreign investors' choice of location than the level of the environmental regulatory measures.
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Bibliographic InfoPaper provided by University of Manchester, Institute for Development Policy and Management (IDPM) in its series Impact Assessment Research Centre (IARC) Working Papers with number 30584.
Date of creation: 2005
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Environmental regulation; foreign direct investment; Japanese multinationals; Environmental Economics and Policy; International Relations/Trade; Q56; F21;
Find related papers by JEL classification:
- Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
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