Do environmental characteristics influence foreign direct investment growth? A cross-national study,1990-2000

Abstract

The author engages several theoretical traditions in both economics and sociology to examine the impacts of levels of environmental efficiency and environmental institutions on foreign investment location in less-developed countries. Results from static score design panel OLS models of 52 countries provide mixed results. Less-developed countries with higher levels of carbon dioxide emissions per unit of gross domestic product attract higher levels of foreign investment, whereas less-developed countries with environmental ministries attract lower levels of foreign investment. Other independent variables - including sulfur dioxide emissions per unit of GDP, environmental treaty ratification, and environmental INGO presence/rate - show no statistically significant relationship with foreign investment location. The results underscore the continuing importance of the pollution havens hypothesis as well as the need for further research.