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The curse of the haven: The impact of multinational enterprise on environmental regulation

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  • Dam, Lammertjan
  • Scholtens, Bert

Abstract

We analyze the behavior of multinational enterprises in the context of resource rich and poor countries and regarding high and low income countries. We depart from the pollution haven hypothesis and the resource curse. The pollution haven hypothesis states that multinational enterprises move their dirty operations to countries with weak environmental regulation. The resource curse holds that economic growth in countries abundant in natural resources is reduced. We find that more polluting firms are relatively more often located in countries with weak environmental regulation. However, multinational enterprises do not have a significant impact on environmental regulation in the host country. It appears that it is mainly the quality of institutions that drives both the pollution haven and the resource curse.

Suggested Citation

  • Dam, Lammertjan & Scholtens, Bert, 2012. "The curse of the haven: The impact of multinational enterprise on environmental regulation," Ecological Economics, Elsevier, vol. 78(C), pages 148-156.
    • Handle: RePEc:eee:ecolec:v:78:y:2012:i:c:p:148-156
    DOI: 10.1016/j.ecolecon.2012.04.011
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    More about this item

    Keywords

    Environmental responsibility; FDI; Resource curse; Institutional quality; Multinational enterprises; Pollution haven;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • 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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