Preventing pollution havens? Environmental Provisions in Preferential Trade Agreements and Foreign Direct Investment

Clara Brandi () and Federico Carri-Caccia ()
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Clara Brandi: German Institute of Development and Sustainability
Federico Carri-Caccia: Department of International and Spanish Economics, University of Granada

No 202513, Working Papers from Center for Global Policy Analysis, LeBow College of Business, Drexel University

Abstract: The present paper re-visits the link between cross-border mergers and acquisitions (M&As) and bilateral trade liberalization. It presents new evidence on the extent to which investment related environmental provisions (IEP) embedded in Preferential Trade Agreements (PTAs) moderate the impact of PTAs on cross-border M&As. To this end, we estimate a gravity model. Our findings suggest that IEPs diminish the positive effect of PTAs on bilateral M&As. We show that IEP undermines the positive effect of PTAs on investments flows between countries with high environmental stringency.

Keywords: Gravity; M&As; Pollution haven; PTA (search for similar items in EconPapers)
JEL-codes: F13 F21 F23 Q58 (search for similar items in EconPapers)
Pages: 28
Date: 2025-04
New Economics Papers: this item is included in nep-env and nep-res
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https://www.lebow.drexel.edu/sites/default/files/2 ... pollution-havens.pdf First version, 2025 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:drx:wpaper:202513

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