Pollution Heaven Hypothesis, Foreign Direct Investment (FDI), environment, pollution control enforcement, laxity.
This article reexamines the pollution heaven hypothesis, using measureable environmental indicators to quantify the laxity of pollution control enforcements. The article examines the impact of pollution control enforcements on FDI inflow in industries across the spectrum as well as individual industries. The study was done on a global platform with separate groups of ASEAN countries and domestically within Thailand. Data from the World Bank, UNCTAD and Thailandâ€™s Board of Investment between years 2008 to 2013 were used with panel data regression. Mixed results were obtained; low levels of pollution control enforcements significantly attract FDI inflow to ASEAN countries and East Asia Pacific Region, while in the cases of Europe, Central Asia and Latin America no significant result was found. For Thailand, as a host country, firm-level evaluation procedures using pollution intensity value together with laxity of pollution control enforcements were evaluated. Foreign investors from various countries consider that low levels of pollution control enforcements in Thailand reflected significantly and attracted their investment decisions.
Full Text : PDF
- Chung, Sunghoon., 2014. Environmental Regulation and Foreign Direct Investement: Evidence from South Korea. Journal of Development Economics, 108, 222-236.
- Co, Catherine Y. and List, John A., 2000. The Effects of Environmental Regulations on Foreign Direct Investment. Journal of Environmental Economics and Management, 40, 1-20.
- Copeland, B.R and Taylor, M.S., 2003. Trade and The Environment. Princeton University Press.
- Copeland, B.R and Taylor, M.S., 2004. Trade, Growth and the Environment. Journal of Economic Literature, 42(1), 7-71.
- Dean, J.M., Lovely M.E, and Wang, Hua., 2009. Are Foreign Investors Attracted to Weak Environmental Regulation? Evaluating the Evidence from China. Journal of Development Economics, 90, 1 - 13.
- Dean, J.M., 2000. Does Trade Liberalization Harm the Environment? A New Test. Canadian Journal of Economics, 35(4), 819-842.
- Dean, J.M. and Lovely M.E., 2008. Trade Growth, Production Fragmentation, and China's Environment. National Bureau of Economic Research Working Paper. Available at the National Bureau of Economic Research website: http://www.nber.org/papers/w13860 [Access October 2014]
- Jaffe, A.B. and Palmer, Karen., 1997. Environmental Regulation and Innovation: A Panel Data Study. The Review of Economics and Statistics, 79(4), 610-619.
- Levinson, A., 1996. Environmental Regulations and Manufacturers' Location Choices: Evidence from the Census of Manufactures. Journal of Public Economics, 62, 5-29.
- Levinson, A., 2009. Technology, International Trade, and Pollution from US Manufacturing. The American Economic Review, 99(5), 2177-2192.
- Levinson, A. and Keller, W., 2002. Pollution Abatement Costs and Foreign Direct Investment Inflow to U.S. States. The Review of Economics and Statistic, 84(4), 691-703.
- Levinson, A. and Taylor M.S., 2008. Unmasking the Pollution Heaven Effect. International Economic Review, 49(1), 223-254.
- Milner, C., Reed G. and Talerngsri, Pawin., 2004. Foreign Direct Investment and Vertical Integration of Production by Japanese Multinationals in Thailand. Journal of Comparative Economics, 32, 805-821.
- Smarzynska, B.K. and Wei, Shang., 2001. Pollution Heavens and Foreign Direct Investment: Dirty Secret or Popular Myth?. National Bureau of Economic Research Working Paper. Available at the National Bureau of Economic Research website: http://www.nber.org/papers/w8465 [Access August 2014]
- Wagner U.J. and Timmins C.D., 2009. Agglomeration Effects in Foreign Direct Investment and the Pollution Heaven Hypothesis. Environmental and Resources Economics, 43, 231-256.
- Xing Y. and Kolstad C.D., 2002. Do Lax Environmental Regulations Attract Foreign Investment?. Environmental and Resources Economics, 21, 1-22.
- Zeng, Ka., 2012. Do Developing Countries Invest Up? The Environmental Effects of Foreign Direct Investment from Less-Developed Countries. World Development, 40(11), 2221-2233.