IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Environmental Regulations, Trade, and Foreign Direct Investment: Evidence from Gravity Equations

  • Bassem Kahouli
  • Anis Omri
  • Anissa Chaibi

Since the early 90s, after the implementation of various regulatory multinational agreements,

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Department of Research, Ipag Business School in its series Working Papers with number 2014-189.

in new window

Length: 21 pages
Date of creation: 01 Jan 2014
Date of revision:
Handle: RePEc:ipg:wpaper:2014-189
Contact details of provider: Postal:
184 Boulevard Saint-Germain, 75006 Paris

Phone: 33 1 53 63 36 00
Web page:

More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Svetlana Raudonen & Andreas Freytag, 2012. "Determinants of FDI inflows into the Baltic countries: Empirical evidence from a gravity model," Jena Economic Research Papers 2012-060, Friedrich-Schiller-University Jena.
  2. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
  3. Dean, Judith M. & Lovely, Mary E. & Wang, Hua, 2009. "Are foreign investors attracted to weak environmental regulations? Evaluating the evidence from China," Journal of Development Economics, Elsevier, vol. 90(1), pages 1-13, September.
  4. Martínez-Zarzoso, Inmaculada & Felicitas, Nowak-Lehmann D. & Horsewood, Nicholas, 2009. "Are regional trading agreements beneficial?: Static and dynamic panel gravity models," The North American Journal of Economics and Finance, Elsevier, vol. 20(1), pages 46-65, March.
  5. Kleinert, Jörn & Toubal, Farid, 2005. "Gravity for FDI," Center for European, Governance and Economic Development Research Discussion Papers 46, University of Goettingen, Department of Economics.
  6. Buch, Claudia M. & Kokta, Robert M. & Piazolo, Daniel, 2003. "Foreign direct investment in Europe: Is there redirection from the South to the East?," Journal of Comparative Economics, Elsevier, vol. 31(1), pages 94-109, March.
  7. Beugelsdijk, Sjoerd & Smeets, Roger & Zwinkels, Remco, 2008. "The impact of horizontal and vertical FDI on host's country economic growth," International Business Review, Elsevier, vol. 17(4), pages 452-472, August.
  8. Mark N. Harris & László Kónya & László Mátyás, 2002. "Modelling the Impact of Environmental Regulations on Bilateral Trade Flows: OECD, 1990-1996," The World Economy, Wiley Blackwell, vol. 25(3), pages 387-405, 03.
  9. Aizenman, Joshua & Noy, Ilan, 2006. "FDI and trade--Two-way linkages?," The Quarterly Review of Economics and Finance, Elsevier, vol. 46(3), pages 317-337, July.
  10. Boriss Siliverstovs & Dieter Schumacher, 2008. "Disaggregated Trade Flows and the "Missing Globalization Puzzle"," Economie Internationale, CEPII research center, issue 115, pages 141-164.
  11. Henrik Braconier & Pehr-Johan Norbäck & Dieter Urban, 2005. "Reconciling the Evidence on the Knowledge-capital Model," Review of International Economics, Wiley Blackwell, vol. 13(4), pages 770-786, 09.
  12. Arik Levinson & M. Scott Taylor, 2004. "Unmasking the Pollution Haven Effect," NBER Working Papers 10629, National Bureau of Economic Research, Inc.
  13. Bergstrand, Jeffrey H. & Egger, Peter, 2007. "A knowledge-and-physical-capital model of international trade flows, foreign direct investment, and multinational enterprises," Journal of International Economics, Elsevier, vol. 73(2), pages 278-308, November.
  14. Frenkel, Michael & Funke, Katja & Stadtmann, Georg, 2004. "A panel analysis of bilateral FDI flows to emerging economies," Economic Systems, Elsevier, vol. 28(3), pages 281-300, September.
  15. Sbia, Rashid & Shahbaz, Muhammad & Hamdi, Helmi, 2013. "A Contribution of Foreign Direct Investment, Clean Energy, Trade Openness, Carbon Emissions and Economic Growth to Energy Demand in UAE," MPRA Paper 48675, University Library of Munich, Germany, revised 27 Jul 2013.
  16. Mohamed El Hedi Arouri & Adel Ben Youssef & Hatem M'Henni & Christophe Rault, 2012. "Energy Consumption, Economic Growth and CO2 Emissions in Middle East and North African Countries," CESifo Working Paper Series 3726, CESifo Group Munich.
  17. J. A. Hausman & W. E. Taylor, 1980. "Panel Data and Unobservable Individual Effects," Working papers 255, Massachusetts Institute of Technology (MIT), Department of Economics.
  18. Xinpeng Xu, 2000. "International Trade and Environmental Regulation: Time Series Evidence and Cross Section Test," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(3), pages 233-257, November.
  19. Helga Kristjánsdóttir, 2013. "Foreign direct investment in a small open economy," Applied Economics Letters, Taylor & Francis Journals, vol. 20(15), pages 1423-1425, October.
  20. Tobey, James A, 1990. "The Effects of Domestic Environmental Policies on Patterns of World Trade: An Empirical Test," Kyklos, Wiley Blackwell, vol. 43(2), pages 191-209.
  21. Omri, Anis & kahouli, Bassem, 2014. "The nexus among foreign investment, domestic capital and economic growth: Empirical evidence from the MENA region," Research in Economics, Elsevier, vol. 68(3), pages 257-263.
  22. Robert J R Elliott & Ying Zhou, 2013. "Environmental Regulation Induced Foreign Direct Investment," Discussion Papers 13-08, Department of Economics, University of Birmingham.
  23. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
  24. Cazzavillan, Guido & Olszewski, Krzysztof, 2012. "Interaction between foreign financial services and foreign direct investment in Transition Economies: An empirical analysis with focus on the manufacturing sector," Research in Economics, Elsevier, vol. 66(4), pages 305-319.
  25. Alicia García-Herrero & Daniel Santabárbara, 2005. "Does China have an impact on foreign direct investment to Latin America?," Working Papers 0517, Banco de España;Working Papers Homepage.
  26. Christian Bellak & Markus Leibrecht & Joze P. Damijan, 2007. "Infrastructure endowment and corporate income taxes as determinants of Foreign Direct Investment in Central- and Eastern European Countries," LICOS Discussion Papers 19307, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  27. Paul Brenton & Francesca Di Mauro & Matthias Lücke, 1999. "Economic Integration and FDI: An Empirical Analysis of Foreign Investment in the EU and in Central and Eastern Europe," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 26(2), pages 95-121, June.
  28. Mitze, Timo & Alecke, Björn & Untiedt, Gerhard, 2008. "Trade, FDI and Cross-Variable Linkages: A German (Macro-)Regional Perspective," MPRA Paper 12245, University Library of Munich, Germany.
  29. Baier, Scott L. & Bergstrand, Jeffrey H., 2009. "Estimating the effects of free trade agreements on international trade flows using matching econometrics," Journal of International Economics, Elsevier, vol. 77(1), pages 63-76, February.
  30. Davide Castellani & Alfredo Jimenez & Antonello Zanfei, 2013. "How remote are R&D labs? Distance factors and international innovative activities," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 44(7), pages 649-675, September.
  31. Leiter, Andrea M. & Parolini, Arno & Winner, Hannes, 2011. "Environmental regulation and investment: Evidence from European industry data," Ecological Economics, Elsevier, vol. 70(4), pages 759-770, February.
  32. Peter Egger & Andrea Lassmann, 2011. "The Language Effect in International Trade: A Meta-Analysis," CESifo Working Paper Series 3682, CESifo Group Munich.
  33. Jerneja Jug & Daniel Mirza, 2005. "Environmental Regulations in Gravity Equations: Evidence from Europe," The World Economy, Wiley Blackwell, vol. 28(11), pages 1591-1615, November.
  34. Zwinkels, Remco C.J. & Beugelsdijk, Sjoerd, 2010. "Gravity equations: Workhorse or Trojan horse in explaining trade and FDI patterns across time and space?," International Business Review, Elsevier, vol. 19(1), pages 102-115, February.
  35. repec:ipg:wpaper:2014-557 is not listed on IDEAS
  36. Ben Kheder, Sonia & Zugravu, Natalia, 2012. "Environmental regulation and French firms location abroad: An economic geography model in an international comparative study," Ecological Economics, Elsevier, vol. 77(C), pages 48-61.
  37. Omri, Anis & Kahouli, Bassem, 2014. "Causal relationships between energy consumption, foreign direct investment and economic growth: Fresh evidence from dynamic simultaneous-equations models," Energy Policy, Elsevier, vol. 67(C), pages 913-922.
  38. Medvedev, Denis, 2012. "Beyond Trade: The Impact of Preferential Trade Agreements on FDI Inflows," World Development, Elsevier, vol. 40(1), pages 49-61.
  39. Sajid Anwar & Lan Phi Nguyen, 2010. "Foreign direct investment and economic growth in Vietnam," Asia Pacific Business Review, Taylor & Francis Journals, vol. 16(1-2), pages 183-202, April.
  40. Goh, Soo Khoon & Wong, Koi Nyen & Tham, Siew Yean, 2013. "Trade linkages of inward and outward FDI: Evidence from Malaysia," Economic Modelling, Elsevier, vol. 35(C), pages 224-230.
  41. Bassem Kahouli & Samir Maktouf, 2015. "Trade creation and diversion effects in the Mediterranean area: Econometric analysis by gravity model," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 24(1), pages 76-104, February.
  42. Bengoa, Marta & Sanchez-Robles, Blanca, 2003. "Foreign direct investment, economic freedom and growth: new evidence from Latin America," European Journal of Political Economy, Elsevier, vol. 19(3), pages 529-545, September.
  43. Chengang Wang & Yingqi Wei & Xiaming Liu, 2010. "Determinants of Bilateral Trade Flows in OECD Countries: Evidence from Gravity Panel Data Models," The World Economy, Wiley Blackwell, vol. 33(7), pages 894-915, 07.
  44. Balasubramanyam, V N & Sapsford, David & Griffiths, David, 2002. "Regional Integration Agreements and Foreign Direct Investment: Theory and Preliminary Evidence," Manchester School, University of Manchester, vol. 70(3), pages 460-82, June.
  45. Mina, Wasseem Michel, 2012. "The Institutional Reforms Debate and FDI Flows to the MENA Region: The “Best” Ensemble," World Development, Elsevier, vol. 40(9), pages 1798-1809.
  46. Chong Wha Lee, 2013. "Does religion affect international trade in services more than trade in goods?," Applied Economics Letters, Taylor & Francis Journals, vol. 20(10), pages 998-1002, July.
  47. Peter Egger & Michael Pfaffermayr, 2004. "Distance, trade and FDI: a Hausman-Taylor SUR approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(2), pages 227-246.
  48. Costantini, Valeria & Crespi, Francesco, 2007. "Environmental regulation and the export dynamics of energy technologies," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 200708, University of Turin.
  49. Elina Ribakova & Balázs Horváth & Dimitri G Demekas & Yi Wu, 2005. "Foreign Direct Investment in Southeastern Europe; How (and How Much) Can Policies Help?," IMF Working Papers 05/110, International Monetary Fund.
  50. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  51. Cole, Matthew A., 2006. "Does trade liberalization increase national energy use?," Economics Letters, Elsevier, vol. 92(1), pages 108-112, July.
  52. repec:cii:cepiei:2010-april-122-4 is not listed on IDEAS
  53. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
  54. Hejazi, Walid, 2009. "Does China receive more regional FDI than gravity would suggest?," European Management Journal, Elsevier, vol. 27(5), pages 327-335, October.
  55. David L. Carr & James R. Markusen & Keith E. Maskus, 1998. "Estimating the Knowledge-Capital Model of the Multinational Enterprise," NBER Working Papers 6773, National Bureau of Economic Research, Inc.
  56. Stein, Ernesto & Daude, Christian, 2007. "Longitude matters: Time zones and the location of foreign direct investment," Journal of International Economics, Elsevier, vol. 71(1), pages 96-112, March.
  57. Antonucci, Daniele & Manzocchi, Stefano, 2006. "Does Turkey have a special trade relation with the EU?: A gravity model approach," Economic Systems, Elsevier, vol. 30(2), pages 157-169, June.
  58. Kreinin, Mordechai E. & Plummer, Michael G., 2008. "Effects of regional integration on FDI: An empirical approach," Journal of Asian Economics, Elsevier, vol. 19(5-6), pages 447-454.
  59. Cole, Matthew A. & Elliott, Robert J. R., 2003. "Determining the trade-environment composition effect: the role of capital, labor and environmental regulations," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 363-383, November.
  60. repec:cii:cepiie:2010-april-122-4 is not listed on IDEAS
  61. Chakrabarti, Avik, 2001. "The Determinants of Foreign Direct Investment: Sensitivity Analyses of Cross-Country Regressions," Kyklos, Wiley Blackwell, vol. 54(1), pages 89-113.
  62. Lin, Faqin & Sim, Nicholas C.S., 2012. "Death of distance and the distance puzzle," Economics Letters, Elsevier, vol. 116(2), pages 225-228.
  63. repec:pal:imfstp:v:51:y:2004:i:s1:p:50-63 is not listed on IDEAS
  64. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  65. Bevan, Alan A. & Estrin, Saul, 2004. "The determinants of foreign direct investment into European transition economies," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 775-787, December.
  66. Rema Hanna, 2010. "US Environmental Regulation and FDI: Evidence from a Panel of US-Based Multinational Firms," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 158-89, July.
  67. Timo Mitze & Alecke Björn & Untiedt Gerhard, 2010. "Trade-FDI Linkages in a Simultaneous Equations System of Gravity Models for German Regional Data," International Economics, CEPII research center, issue 122, pages 121–162.
  68. Nigel Driffield & James H Love, 2007. "Linking FDI motivation and host economy productivity effects: conceptual and empirical analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 38(3), pages 460-473, May.
  69. Luiz R. De Mello & Kiichiro Fukasaku, 2000. "Trade and foreign direct investment in Latin America and Southeast Asia: temporal causality analysis," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(7), pages 903-924.
  70. Omri, Anis, 2013. "CO2 emissions, energy consumption and economic growth nexus in MENA countries: Evidence from simultaneous equations models," Energy Economics, Elsevier, vol. 40(C), pages 657-664.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ipg:wpaper:2014-189. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ingmar Schumacher)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.