IDEAS home Printed from https://ideas.repec.org/a/wsi/jeapmx/v07y2005i04ns1464333205002237.html
   My bibliography  Save this article

The Impact Of Environmental Stringency On The Foreign Direct Investments Of The Oecd Countries

Author

Listed:
  • HAKAN MIHCI

    (Hacettepe University, Department of Economics, 06800, Beytepe, Ankara, Turkey)

  • SELIM CAGATAY

    (Hacettepe University, Department of Economics, 06800, Beytepe, Ankara, Turkey)

  • ONUR KOSKA

    (Hacettepe University, Department of Economics, 06800, Beytepe, Ankara, Turkey)

Abstract

The main objective of this paper is to evaluate the impact of the environmental stringency on trade and the foreign direct investments (FDI) in particular. To do so, both theoretical and empirical investigations are performed. During the empirical investigation, an index of environmental sensitivity performance (IESP) is constructed for the OECD countries. Additionally, the main determinants of the OECD countries' FDI outflows are also analysed alongside with the environmental sensitivity variable for the countries in the sample.The empirical analysis in this paper finds some evidence to suggest that environmental stringency has an important impact on the FDI outflows of the OECD countries. The impact of the degree of environmental stringency on the FDI is significantly positive implying a direct relationship between FDI outflows and relative environmental sensitivity performance of the OECD countries.

Suggested Citation

  • Hakan Mihci & Selim Cagatay & Onur Koska, 2005. "The Impact Of Environmental Stringency On The Foreign Direct Investments Of The Oecd Countries," Journal of Environmental Assessment Policy and Management (JEAPM), World Scientific Publishing Co. Pte. Ltd., vol. 7(04), pages 679-704.
    • Handle: RePEc:wsi:jeapmx:v:07:y:2005:i:04:n:s1464333205002237
    DOI: 10.1142/S1464333205002237
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S1464333205002237
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S1464333205002237?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2003. "Export versus FDI," NBER Working Papers 9439, National Bureau of Economic Research, Inc.
    2. Arik Levinson, 2001. "An Industry-Adjusted Index of State Environmental Compliance Costs," NBER Chapters, in: Behavioral and Distributional Effects of Environmental Policy, pages 131-158, National Bureau of Economic Research, Inc.
    3. Karolina Ekholm & Rikard Forslid & James R. Markusen, 2021. "Export-Platform Foreign Direct Investment," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 6, pages 111-130, World Scientific Publishing Co. Pte. Ltd..
    4. Blomström, Magnus & Kokko, Ari, 2003. "The Economics of Foreign Direct Investment Incentives," EIJS Working Paper Series 168, Stockholm School of Economics, The European Institute of Japanese Studies.
    5. repec:cdl:ucsbec:28-98 is not listed on IDEAS
    6. Yuquing Xing & Charles Kolstad, 2002. "Do Lax Environmental Regulations Attract Foreign Investment?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(1), pages 1-22, January.
    7. Baldwin, Richard E. & Ottaviano, Gianmarco I. P., 2001. "Multiproduct multinationals and reciprocal FDI dumping," Journal of International Economics, Elsevier, vol. 54(2), pages 429-448, August.
    8. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.
    9. Jeffrey A. Frankel & Andrew K. Rose, 2005. "Is Trade Good or Bad for the Environment? Sorting Out the Causality," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 85-91, February.
    10. Javorcik Beata Smarzynska & Wei Shang-Jin, 2003. "Pollution Havens and Foreign Direct Investment: Dirty Secret or Popular Myth?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(2), pages 1-34, December.
    11. Wolfgang Keller & Arik Levinson, 1999. "Environmental Compliance Costs and Foreign Direct Investment Inflows to U.S. States," NBER Working Papers 7369, National Bureau of Economic Research, Inc.
    12. James R. Markusen & Anthony J. Venables, 2021. "Multinational firms and the new trade theory," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 3, pages 47-67, World Scientific Publishing Co. Pte. Ltd..
    13. Robert E. Lipsey, 2000. "Interpreting Developed Countries' Foreign Direct Investment," NBER Working Papers 7810, National Bureau of Economic Research, Inc.
    14. S. Lael Brainard, 1993. "A Simple Theory of Multinational Corporations and Trade with a Trade-Off Between Proximity and Concentration," NBER Working Papers 4269, National Bureau of Economic Research, Inc.
    15. James R. Markusen & Keith E. Maskus, 2001. "Multinational Firms: Reconciling Theory and Evidence," NBER Chapters, in: Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey, pages 71-98, National Bureau of Economic Research, Inc.
    16. Robert E. Lipsey, 1991. "Foreign Direct Investment in the U.S. and U.S. Trade," NBER Working Papers 3623, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hassaballa, Hoda, 2014. "Testing for Granger causality between energy use and foreign direct investment Inflows in developing countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 31(C), pages 417-426.
    2. Gong, Zhonghang & Wu, Yuqin & Tawiah, Vincent & Abdulrasheed, Zakari, 2023. "The environmental footprint of international business in Africa; The role of natural resources," Resources Policy, Elsevier, vol. 80(C).
    3. Theodoros Christoforidis & Constantinos Katrakilidis, 2022. "Does Foreign Direct Investment Matter for Environmental Degradation? Empirical Evidence from Central–Eastern European Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 2665-2694, December.
    4. Jun Wen & Waheed Ali & Jamal Hussain & Nadeem Akhtar Khan & Hadi Hussain & Najabat Ali & Rizwan Akhtar, 2022. "Dynamics between green innovation and environmental quality: new insights into South Asian economies," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 39(2), pages 543-565, July.
    5. Shahbaz, Muhammad & Nasreen, Samia & Abbas, Faisal & Anis, Omri, 2015. "Does foreign direct investment impede environmental quality in high-, middle-, and low-income countries?," Energy Economics, Elsevier, vol. 51(C), pages 275-287.
    6. José-Antonio Monteiro & Madina Kukenova, 2008. "Does Lax Environmental Regulation Attract FDI When Accounting For "Third-Country" Effects?," IRENE Working Papers 08-01, IRENE Institute of Economic Research.
    7. Balcilar, Mehmet & Usman, Ojonugwa & Ike, George N., 2023. "Operational behaviours of multinational corporations, renewable energy transition, and environmental sustainability in Africa: Does the level of natural resource rents matter?," Resources Policy, Elsevier, vol. 81(C).
    8. Yaya Keho, 2015. "Is Foreign Direct Investment Good or Bad for the Environment? Times Series Evidence from ECOWAS Countries," Economics Bulletin, AccessEcon, vol. 35(3), pages 1916-1927.
    9. Hakan Mıhcı & Selim Çağatay & Onur A. Koska, 2011. "The determinants of foreign direct investment outflows from the European Union countries," Economics Bulletin, AccessEcon, vol. 31(3), pages 2653-2666.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:got:cegedp:58 is not listed on IDEAS
    2. Erdey, László, 2004. "A működőtőke-áramlás a telephelyválasztás elméletének tükrében [The flow of operating capital in the light of the theory of location choice]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 472-494.
    3. Mitze, Timo & Alecke, Björn & Untiedt, Gerhard, 2008. "Trade, FDI and Cross-Variable Linkages: A German (Macro-)Regional Perspective," MPRA Paper 12245, University Library of Munich, Germany.
    4. James R. Markusen & Keith E. Maskus, 2001. "General-Equilibrium Approaches to the Multinational Firm: A Review of Theory and Evidence," NBER Working Papers 8334, National Bureau of Economic Research, Inc.
    5. Jitao Tang, 2015. "Testing the Pollution Haven Effect: Does the Type of FDI Matter?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(4), pages 549-578, April.
    6. Köller, Mareike, 2006. "Ausländische Direktinvestitionen in Irland: Eine theoriegestützte Analyse," University of Göttingen Working Papers in Economics 58, University of Goettingen, Department of Economics.
    7. María C. Latorre, 2009. "The economic analysis of multinationals and foreign direct investment: a review," Hacienda Pública Española / Review of Public Economics, IEF, vol. 191(4), pages 97-126, December.
    8. M. T. Alguacil & V. Orts, 2003. "Inward Foreign Direct Investment and Imports in Spain," International Economic Journal, Taylor & Francis Journals, vol. 17(3), pages 19-38.
    9. Salvador Barrios & Holger Görg & Eric Strobl, 2003. "Multinational Enterprises and New Trade Theory: Evidence for the Convergence Hypothesis," Open Economies Review, Springer, vol. 14(4), pages 397-418, October.
    10. Richard Baldwin & Toshihiro Okubo, 2014. "Networked FDI: Sales and Sourcing Patterns of Japanese Foreign Affiliates," The World Economy, Wiley Blackwell, vol. 37(8), pages 1051-1080, August.
    11. Gianmarco I.P. Ottaviano & Alessandro Turrini, 2002. "Distance and FDI when Contracts are Incomplete," Development Working Papers 165, Centro Studi Luca d'Agliano, University of Milano.
    12. Grossman, Gene M. & Helpman, Elhanan & Szeidl, Adam, 2006. "Optimal integration strategies for the multinational firm," Journal of International Economics, Elsevier, vol. 70(1), pages 216-238, September.
    13. Wacker, Konstantin M. & Großkurth, Philipp & Lakemann, Tabea, 2014. "Terms of Trade, Foreign Direct Investment, and Development: A Case of Intra-Asian “Kicking Away the Ladder”?," Working Papers on Regional Economic Integration 122, Asian Development Bank.
    14. Francois, Joseph & Christen, Elisabeth, 2010. "Modes of Delivery in Services," CEPR Discussion Papers 7912, C.E.P.R. Discussion Papers.
    15. Toubal, Farid & Kleinert, Jörn & Buch, Claudia M., 2003. "Determinants of German FDI: New Evidence from Micro-Data," Discussion Paper Series 1: Economic Studies 2003,09, Deutsche Bundesbank.
    16. Erdal Yalcin & Davide Sala, 2014. "Uncertain Productivity Growth and the Choice between FDI and Export," Review of International Economics, Wiley Blackwell, vol. 22(1), pages 189-208, February.
    17. Oscar Bajo-Rubio & María Montero-Muñoz, 2001. "Foreign Direct Investment and Trade: A Causality Analysis," Open Economies Review, Springer, vol. 12(3), pages 305-323, July.
    18. Peter Egger & Michael Pfaffermayr, 2004. "Distance, trade and FDI: a Hausman-Taylor SUR approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(2), pages 227-246.
    19. Irac, D., 2006. "Revisiting the proximity-concentration trade-off: Distance and Horizontal Foreign Direct Investment in OECD countries," Working papers 153, Banque de France.
    20. Akintoye V. Adejumo & Simplice A. Asongu, 2019. "Foreign Direct Investment, Domestic Investment and Green Growth in Nigeria: Any Spillovers?," Working Papers of the African Governance and Development Institute. 19/078, African Governance and Development Institute..
    21. Robert Elliott & Ying Zhou, 2013. "Environmental Regulation Induced Foreign Direct Investment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 55(1), pages 141-158, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:jeapmx:v:07:y:2005:i:04:n:s1464333205002237. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/jeapm/jeapm.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.