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Green Havens and Pollution Havens

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  • Steven Poelhekke
  • Frederick Ploeg

Abstract

We test for pollution haven effects in outward foreign direct investment (FDI) for different sectors using a comprehensive and exhaustive dataset for outward FDI from the Netherlands, one of the most environmentally stringent countries and a major source of global FDI. Our evidence suggests that in the sectors natural resources extraction and refining, construction, retail, food processing, beverages and tobacco, and utilities, a less stringent environmental policy in the host country significantly attracts FDI. What is important for these pollution haven effects is not only regulation but also enforcement of environmental policy. In contrast to earlier results, it is not only footloose industries that display pollution haven effects, but also the traditional pollution-intensive industries. But for the sectors machines, electronics and automotive and transportation and communication a more stringent and better enforced environmental policy attracts more FDI as this may help their reputation for sustainable management and CSR. These sectors display green haven effects. These findings have important implications for the sector distribution of FDI in destination countries
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  • Steven Poelhekke & Frederick Ploeg, 2015. "Green Havens and Pollution Havens," The World Economy, Wiley Blackwell, vol. 38(7), pages 1159-1178, July.
    • Handle: RePEc:bla:worlde:v:38:y:2015:i:7:p:1159-1178
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    File URL: http://hdl.handle.net/10.1111/twec.12219
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    3. Mark Elder & Magnus Bengtsson & Lewis Akenji, 2016. "An Optimistic Analysis of the Means of Implementation for Sustainable Development Goals: Thinking about Goals as Means," Sustainability, MDPI, vol. 8(9), pages 1-24, September.
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    5. Aparna Sawhney & Rashmi Rastogi, 2019. "FDI in Indian Manufacturing: Whither high-tech industries?," Economics Bulletin, AccessEcon, vol. 39(3), pages 2192-2209.
    6. Ping Lin & Yu Pang, 2020. "Command-and-control regulation, incentive for pollution abatement, and market structure," Journal of Regulatory Economics, Springer, vol. 57(2), pages 159-180, April.
    7. Huan Zhang, 2021. "The Impact of Urban Sprawl on Environmental Pollution: Empirical Analysis from Large and Medium-Sized Cities of China," IJERPH, MDPI, vol. 18(16), pages 1-19, August.
    8. Xuhui Ding & Yong Chen & Min Li & Narisu Liu, 2022. "Booster or Killer? Research on Undertaking Transferred Industries and Residents’ Well-Being Improvements," IJERPH, MDPI, vol. 19(22), pages 1-19, November.
    9. Jensen, Camilla & Mina, Andrea, 2019. "Did transition bring cleaner air? Effects of ownership, territorial and technology policy on air pollution," Ecological Economics, Elsevier, vol. 165(C), pages 1-1.
    10. Andrew Ojede & Ruby Kishan, 2017. "External Macroeconomic Imbalances And Foreign Direct Investment Inflows To Developing Countries," Contemporary Economic Policy, Western Economic Association International, vol. 35(3), pages 484-504, July.
    11. Zhonghua Cheng & Lianshui Li & Jun Liu, 2018. "The spatial correlation and interaction between environmental regulation and foreign direct investment," Journal of Regulatory Economics, Springer, vol. 54(2), pages 124-146, October.
    12. Cust, James & Harding, Torfinn & Krings, Hanna & Rivera-Ballesteros, Alexis, 2023. "Public governance versus corporate governance: Evidence from oil drilling in forests," Journal of Development Economics, Elsevier, vol. 163(C).
    13. Niranjan Chipalkatti & Quan Vu Le & Meenakshi Rishi, 2021. "Sustainability and Society: Do Environmental, Social, and Governance Factors Matter for Foreign Direct Investment?," Energies, MDPI, vol. 14(19), pages 1-18, September.
    14. Yoo Jung Ha, 2021. "Foreign multinational enterprises and eco-innovation in local firms: the effect of imitation," Asian Business & Management, Palgrave Macmillan, vol. 20(4), pages 488-517, September.
    15. Valentina Raimondi & Margherita Scoppola, 2022. "Foreign land acquisitions and environmental regulations: Does the pollution‐haven effect hold?," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 172-194, February.
    16. Phuong Thao Dang, 2019. "Sustainability comes from within: carbon dioxide emissions, FDI origin factor and institutional qualities in developing countries," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(2), pages 439-471, July.
    17. Fozia Latif Gill & K Kuperan Viswanathan & Mohd Zaini Abdul Karim, 2018. "The Critical Review of the Pollution Haven Hypothesis (PHH)," International Journal of Energy Economics and Policy, Econjournals, vol. 8(1), pages 167-174.
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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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