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Tax Policy and Environmental Impact of FDI: Empirical Evidence in Developing Countries

Author

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  • Muoi Mot Huynh Van

    (Tra Vinh University, Tra Vinh, Vietnam)

  • Trung Kien Tran

    (University of Economics Ho Chi Minh City, Ho Chi Minh City, Vietnam)

Abstract

The paper empirically analyzes the role of tax policy in FDI-Environmental pollution nexus in developing countries from 2004 to 2016. In general, FDI has a significant effect to increase air pollution in these countries supporting the pollution haven hypothesis. Interestingly, the government plays a crucial role to adjust the environmental impacts of FDI. When the higher quality of institution helps to reduce air pollution, the tax policy has both the direct effect to reduce the level of environmental degradation and the indirect effect through mitigating the harmful environmental impact of FDI in this case.

Suggested Citation

  • Muoi Mot Huynh Van & Trung Kien Tran, 2021. "Tax Policy and Environmental Impact of FDI: Empirical Evidence in Developing Countries," Economic Research Guardian, Mutascu Publishing, vol. 11(1), pages 144-155, June.
    • Handle: RePEc:wei:journl:v:11:y:2021:i:1:p:144-155
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    References listed on IDEAS

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    More about this item

    Keywords

    Environment Pollution; FDI; Tax policy; GMM; Developing countries;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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