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In Search of Environmental Spillovers

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  • Facundo Albornoz
  • Matthew A. Cole
  • Robert J. R. Elliott
  • Marco G. Ercolani

Abstract

There is an extensive literature that examines the relationship between foreign direct investment (FDI) and the productivity and competitiveness of domestic firms. Using estimation techniques from the productivity spillover literature, this paper tests for the presence of environmental spillovers from foreign firms. On the basis that foreign-owned firms may encourage firms in their extended supply chain to improve their environment-related management practices, evidence for the existence of environmental spillovers should be easier to find than productivity spillovers where firms naturally attempt to minimise intra-industry knowledge leakage. In this paper we show that, first, foreign-owned firms are more likely to implement environmental management systems (EMS) and, second, that the presence of foreign-owned firms in those sectors that a firm supplies can encourage good environmental practice. This is especially true if a firm is foreign, has high absorptive capacity, and operates in the presence of formal and informal networks. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd.

Suggested Citation

  • Facundo Albornoz & Matthew A. Cole & Robert J. R. Elliott & Marco G. Ercolani, 2009. "In Search of Environmental Spillovers," The World Economy, Wiley Blackwell, vol. 32(1), pages 136-163, January.
  • Handle: RePEc:bla:worlde:v:32:y:2009:i:1:p:136-163
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    Cited by:

    1. Arlan Brucal, Inessa Love, Beata Javorcik, 2018. "Energy savings through foreign acquisitions? Evidence from Indonesian manufacturing plants," GRI Working Papers 289, Grantham Research Institute on Climate Change and the Environment.
    2. Michael Hübler & Alexander Glas, 2014. "The Energy-Bias of North–South Technology Spillovers: A Global, Bilateral, Bisectoral Trade Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(1), pages 59-89, May.
    3. Andrea Lucchesi & Matthew A. Cole & Robert J. R. Elliot & Naercio A. Menezes-Filho, 2016. "Determinants Of Environmental Innovation In Brazilian Manufacturing Industries," Anais do XLII Encontro Nacional de Economia [Proceedings of the 42nd Brazilian Economics Meeting] 143, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    4. Maoliang Bu & Marcus Wagner, 2016. "Racing to the bottom and racing to the top: The crucial role of firm characteristics in foreign direct investment choices," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 47(9), pages 1032-1057, December.
    5. Svetlana Batrakova & Ronald Davies, 2012. "Is there an environmental benefit to being an exporter? Evidence from firm-level data," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 148(3), pages 449-474, September.
    6. Cole, Matthew A. & Elliott, Robert J.R. & Okubo, Toshihiro & Zhou, Ying, 2013. "The carbon dioxide emissions of firms: A spatial analysis," Journal of Environmental Economics and Management, Elsevier, vol. 65(2), pages 290-309.
    7. Roy, Jayjit & Yasar, Mahmut, 2015. "Energy efficiency and exporting: Evidence from firm-level data," Energy Economics, Elsevier, vol. 52(PA), pages 127-135.
    8. Yuping Deng & Helian Xu, 2015. "International Direct Investment and Transboundary Pollution: An Empirical Analysis of Complex Networks," Sustainability, MDPI, Open Access Journal, vol. 7(4), pages 1-25, April.
    9. Doytch, Nadia & Narayan, Seema, 2016. "Does FDI influence renewable energy consumption? An analysis of sectoral FDI impact on renewable and non-renewable industrial energy consumption," Energy Economics, Elsevier, vol. 54(C), pages 291-301.
    10. Julia Swart & Charles van Marrewijk, 2011. "The Pollution Effects of Mergers and Acquisitions: Asymmetry, Disaggregation, and Multilateralism," Tinbergen Institute Discussion Papers 11-073/2, Tinbergen Institute.
    11. repec:kap:enreec:v:67:y:2017:i:2:d:10.1007_s10640-015-9990-1 is not listed on IDEAS
    12. Michele Imbruno & Tobias Ketterer, 2016. "Energy efficiency gains from trade in intermediate inputs: firm-level evidence from Indonesia," GRI Working Papers 244, Grantham Research Institute on Climate Change and the Environment.
    13. Elliott, Robert J.R. & Sun, Puyang & Chen, Siyang, 2013. "Energy intensity and foreign direct investment: A Chinese city-level study," Energy Economics, Elsevier, vol. 40(C), pages 484-494.
    14. Svetlana Batrakova, 2011. "Flip Side of the Pollution Haven: Do Export Destinations Matter?," Working Papers 201101, School of Economics, University College Dublin.
    15. Doytch, Nadia & Uctum, Merih, 2016. "Globalization and the environmental impact of sectoral FDI," Economic Systems, Elsevier, vol. 40(4), pages 582-594.
    16. Emma Aisbett, 2010. "Powerful Multinational or Persecuted Foreigners: ‘Foreignness’ and Influence over Government," CEPR Discussion Papers 638, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    17. Natalia Zugravu-Soilita, 2017. "How does Foreign Direct Investment Affect Pollution? Toward a Better Understanding of the Direct and Conditional Effects," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 66(2), pages 293-338, February.
    18. Kivyiro, Pendo & Arminen, Heli, 2014. "Carbon dioxide emissions, energy consumption, economic growth, and foreign direct investment: Causality analysis for Sub-Saharan Africa," Energy, Elsevier, vol. 74(C), pages 595-606.

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • 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

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