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The lesser of two evils: an empirical investigation of foreign direct investment-pollution tradeoff

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  • Myeong Hwan Kim
  • Nodir Adilov

Abstract

This article investigates the relationship between Foreign Direct Investment (FDI) and pollution measured by carbon dioxide (CO 2 ) emissions. The results suggest that while lax environmental regulations might attract FDI, the foreign companies utilize less polluting technology as compared to local firms in low-income countries. Thus, FDI does not necessarily increase pollution levels in the host countries. The findings, therefore, simultaneously support the pollution haven and the pollution halo hypotheses.

Suggested Citation

  • Myeong Hwan Kim & Nodir Adilov, 2012. "The lesser of two evils: an empirical investigation of foreign direct investment-pollution tradeoff," Applied Economics, Taylor & Francis Journals, vol. 44(20), pages 2597-2606, July.
    • Handle: RePEc:taf:applec:44:y:2012:i:20:p:2597-2606
    DOI: 10.1080/00036846.2011.566187
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