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

Patrícia Hipólito Leal, Rafaela Vital Caetano and António Cardoso Marques
Additional contact information
Patrícia Hipólito Leal: Management and Economics Department, University of Beira Interior, 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

IJERPH, 2021, vol. 18, issue 4, 1-30

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.

Keywords: inward and outward Foreign Direct Investment flow and stock; globalisation de jure and de facto; index for sustainable economic welfare; corruption; regulation quality; environmental degradation (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.mdpi.com/1660-4601/18/4/1981/pdf (application/pdf)
https://www.mdpi.com/1660-4601/18/4/1981/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jijerp:v:18:y:2021:i:4:p:1981-:d:501616

Access Statistics for this article

IJERPH is currently edited by Ms. Jenna Liu

More articles in IJERPH from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().