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Green Havens and Pollution Havens

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  • Rick Van der Ploeg
  • Steven Poelhekke

Abstract

We test for pollution haven effects in outward foreign direct investment (FDI) for different sectors using a comprehensive and exhaustive dataset for outward FDI from the Netherlands, one of the most environmentally stringent countries and a major source of global FDI. Our evidence suggests that in the sectors natural resources extraction and refining, construction, retail, food processing, beverages and tobacco, and utilities, a less stringent environmental policy in the host country significantly attracts FDI. What is important for these pollution haven effects is not only regulation but also enforcement of environmental policy. In contrast to earlier results, it is not only footloose industries that display pollution haven effects, but also the traditional pollution-intensive industries. But for the sectors machines, electronics and automotive and transportation and communication a more stringent and better enforced environmental policy attracts more FDI as this may help their reputation for sustainable management and CSR. These sectors display green haven effects. These findings have important implications for the sector distribution of FDI in destination countries.

Suggested Citation

  • Rick Van der Ploeg & Steven Poelhekke, 2012. "Green Havens and Pollution Havens," OxCarre Working Papers 087, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    • Handle: RePEc:oxf:oxcrwp:087
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    6. Ping Lin & Yu Pang, 2020. "Command-and-control regulation, incentive for pollution abatement, and market structure," Journal of Regulatory Economics, Springer, vol. 57(2), pages 159-180, April.
    7. Fozia Latif Gill & K Kuperan Viswanathan & Mohd Zaini Abdul Karim, 2018. "The Critical Review of the Pollution Haven Hypothesis (PHH)," International Journal of Energy Economics and Policy, Econjournals, vol. 8(1), pages 167-174.
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    10. Xiaoke Zhao & Xuhui Ding & Liang Li, 2021. "Research on Environmental Regulation, Technological Innovation and Green Transformation of Manufacturing Industry in the Yangtze River Economic Belt," Sustainability, MDPI, vol. 13(18), pages 1-15, September.
    11. Xuhui Ding & Yong Chen & Min Li & Narisu Liu, 2022. "Booster or Killer? Research on Undertaking Transferred Industries and Residents’ Well-Being Improvements," IJERPH, MDPI, vol. 19(22), pages 1-19, November.
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    13. Zhonghua Cheng & Lianshui Li & Jun Liu, 2018. "The spatial correlation and interaction between environmental regulation and foreign direct investment," Journal of Regulatory Economics, Springer, vol. 54(2), pages 124-146, October.
    14. Zongxian Feng & Huiting Hua & Lingle Wang, 2024. "The Influence Mechanism of Bidirectional Foreign Direct Investment on Green Total Factor Productivity in China’s Manufacturing Industry," Sustainability, MDPI, vol. 16(15), pages 1-27, July.
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    17. Valentina Raimondi & Margherita Scoppola, 2022. "Foreign land acquisitions and environmental regulations: Does the pollution‐haven effect hold?," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 172-194, February.
    18. Mark Elder & Magnus Bengtsson & Lewis Akenji, 2016. "An Optimistic Analysis of the Means of Implementation for Sustainable Development Goals: Thinking about Goals as Means," Sustainability, MDPI, vol. 8(9), pages 1-24, September.
    19. Jensen, Camilla & Mina, Andrea, 2019. "Did transition bring cleaner air? Effects of ownership, territorial and technology policy on air pollution," Ecological Economics, Elsevier, vol. 165(C), pages 1-1.
    20. Niranjan Chipalkatti & Quan Vu Le & Meenakshi Rishi, 2021. "Sustainability and Society: Do Environmental, Social, and Governance Factors Matter for Foreign Direct Investment?," Energies, MDPI, vol. 14(19), pages 1-18, September.
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    More about this item

    Keywords

    pollution haven; green haven; FDI; environmental policy; regulation; enforcement; strategic effects; footloose industries; CSR;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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