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A meta-analysis of FDI and environmental regulations

Published online by Cambridge University Press:  14 April 2014

Alief A. Rezza
Alief A. Rezza*
Affiliation:
Norwegian School of Economics, Helleveien 30, 5045 Bergen, Norway. Tel: +47 55959349. Fax: +47 55959543. E-mail: [email protected]
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Abstract

Previous authors have been unable to agree on whether environmental regulations hinder foreign direct investment (FDI). The empirical evidence in this domain remains inconclusive because of the contrasting results observed in the literature, owing to the differing characteristics of the data sets and models used in previous studies. The present study carries out a meta-analysis on a sample of published and unpublished papers on the so-called pollution haven hypothesis (PHH) in order to investigate whether certain aspects of research design affect the presented findings. The paper offers explanations for the mixed findings reported in the literature by suggesting that certain aspects of research design are crucial to explaining their significance. The PHH is more likely to be supported by studies that define FDI as the establishment of new plants and those that use government spending as a proxy for the strictness of environmental regulations. Moreover, focusing investigations on pollution-intensive industries or developing countries hardly increases the likelihood of achieving results that support the PHH.

Type
Research Article
Information
Environment and Development Economics , Volume 20 , Issue 2 , April 2015 , pp. 185 - 208
Copyright
Copyright © Cambridge University Press 2014 

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