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Is the Relocation of Polluting Industries Prompted by FDI Flow and Stock, Globalisation, Corruption and Regulation?

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  • Patrícia Hipólito Leal

    (Management and Economics Department, University of Beira Interior, 6201-001 Covilhã, Portugal
    Management and Economics Department NECE-UBI—Research Unit in Business Sciences, University of Beira Interior, Rua Marquês d’Ávila e Bolama, 6201-001 Covilhã, Portugal)

  • Rafaela Vital Caetano

    (Management and Economics Department, University of Beira Interior, 6201-001 Covilhã, Portugal)

  • António Cardoso Marques

    (Management and Economics Department, University of Beira Interior, 6201-001 Covilhã, Portugal
    Management and Economics Department NECE-UBI—Research Unit in Business Sciences, University of Beira Interior, Rua Marquês d’Ávila e Bolama, 6201-001 Covilhã, Portugal)

Abstract

Can globalisation and foreign direct investment shape sustainable development? Foreign direct investment is one of the main drivers for the transfer of polluting industries. With this in mind, the main objective of this research is to identify the role played by foreign direct investment (flow and stock), globalisation ( de jure and de facto ), corruption and regulatory quality in environmental degradation and sustainable development. To accomplish this objective, and to link the relationships under analysis to the level of development, a comparison between a group of developing countries and a group of developed ones was performed. The results confirm the suitability of the division of the countries by revealing various effects. This analysis was conducted from 1996 to 2017 and by recurring to the Autoregressive Distributed Lag model. This study proves that foreign investors play a vital role in reaching sustainable development. Measures must be implemented to eliminate the distortions that cause a company based in a country with strict environmental regulations to relocate its production to one with lax environmental regulations. However, these measures need to be combined with complementary measures that encourage developing economies to agree to a possible slowdown in their economic growth if sufficiently compensated for this reduced growth.

Suggested Citation

  • Patrícia Hipólito Leal & Rafaela Vital Caetano & António Cardoso Marques, 2021. "Is the Relocation of Polluting Industries Prompted by FDI Flow and Stock, Globalisation, Corruption and Regulation?," IJERPH, MDPI, vol. 18(4), pages 1-30, February.
    • Handle: RePEc:gam:jijerp:v:18:y:2021:i:4:p:1981-:d:501616
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    2. Caetano, Rafaela Vital & Marques, António Cardoso, 2023. "Could energy transition be a game changer for the transfer of polluting industries from developed to developing countries? An application of game theory," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 351-363.

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