Trade, FDI, growth and biodiversity: an empirical analysis for the main OECD countries
AbstractWhether the Environmental Kutznets curve relationship holds for biodiversity or not remains an open issue. While there are several studies investigating the EKC relationship for biodiversity, they suffer from some limitations and the empirical evidence is inconclusive. More specifically, with few exceptions, the previous EKC studies for biodiversity looked into the diversity of a particular species or a number of species rather than a broader measure of biodiversity. In addition, these studies do not control for some economic factors that could directly or indirectly affect the biodiversity stock such as trade and foreign direct investments (FDI). International trade, in fact, could influence the biodiversity trough the effects on economic growth, production specialization and technological innovation diffusion. The presence or not of FDI in a country could be of help in assessing the “pollution haven” hypothesis that has obvious feedbacks on biodiversity. The innovative features of this paper are its attempts to estimate a ECK for biodiversity using an overall index of biodiversity terrestrial and marine and the inclusion in the traditional ECK equation of proxies for trade and FDI. According to our estimates for the main OECD countries in the period 1990-2010, the ECK hypothesis is partially verified. Rising incomes are first associated with increasing biodiversity then with decreasing biodiversity and eventually with increasing biodiversity again. This non-monotonic relationship could be explained by the fact that a certain level of income (production) there may be some biodiversity losses that cannot be continuously substituted with environmental-friendly production technology due to ecological threshold and the unique nature of the damage.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 37730.
Date of creation: 20 Mar 2012
Date of revision:
Biodiversity risk; Trade; FDI; Environmental Kuznets curve;
Find related papers by JEL classification:
- Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- F18 - International Economics - - Trade - - - Trade and Environment
This paper has been announced in the following NEP Reports:
- NEP-AGR-2012-04-10 (Agricultural Economics)
- NEP-ALL-2012-04-10 (All new papers)
- NEP-ENV-2012-04-10 (Environmental Economics)
- NEP-INT-2012-04-10 (International Trade)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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