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Environ Resource Econ (2017) 66:293338 DOI 10.1007/s10640-015-9950-9
Accepted: 6 August 2015 / Published online: 21 August 2015 Springer Science+Business Media Dordrecht 2015
Abstract This paper seeks to investigate the impact of foreign direct investments (FDIs) on industrial pollution (CO2, SO2, NOx and BOD emissions) on a large sample of highly heterogeneous countries. By using panel data on manufacturing FDIs from France, Germany, Sweden, and the United Kingdom between 1995 and 2008, and by developing an empirical model with rst and second order interaction terms, we investigate the existence and the conditionality of the most controversial FDI-induced effects on industrial emissions,i.e., Pollution Haven, Factor Endowments and Pollution Halo hypotheses. The paper has three main ndings: (1) the central hypotheses linking pollution to FDI are found to act simultaneously, with opposing effects; (2) FDIs are associated with pollution reduction,i.e., predominating pollution halo induced effect, in countries with low to average capital-tolabour ratio but not too lax environmental regulation; (3) FDIs are found to increase pollution,i.e., prevailing pollution haven and/or factor endowments induced effects, in countries with average capital endowments and lax environmental regulations, as well as in all the capital abundant countries, though with a smaller magnitude in countries having strict environmental regulations and/or a high-skilled labour force. Some specic and interesting ndings are discussed regarding different FDI-origin countries and FDI-host country groups.
Keywords Environmental regulation FDI Industrial air and water pollution
Pollution halo Pollution haven
JEL Classication F18 F23 Q53 Q56
I would like to thank the two anonymous referees from the Journal for very helpful comments and suggestions that have signicantly improve this paper. I am also grateful to the participants in the CEMOTEV (UVSQ), UPEC, PSE seminars, the 7th Annual International Conference on Business and Society in a Global Economy for their valuable comments on the previous versions of the paper.
B Natalia Zugravu-Soilita
[email protected]; [email protected] UFR des Sciences Sociales / CEMOTEV, University of Versailles Saint-Quentin-en-Yvelines,
47, Bd Vauban, 78280 Guyancourt, France
http://crossmark.crossref.org/dialog/?doi=10.1007/s10640-015-9950-9&domain=pdf
Web End = http://crossmark.crossref.org/dialog/?doi=10.1007/s10640-015-9950-9&domain=pdf
Web End = How does Foreign Direct Investment Affect Pollution? Toward a Better Understanding of the Direct and Conditional Effects
Natalia Zugravu-Soilita1
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294 N. Zugravu-Soilita
Abbreviations
CEE Central and Eastern Europe
CEECs Central and Eastern European Countries CIS Commonwealth of Independent States ER Environmental regulation (index)