Foreign Direct Investment, Technology Transfer and Pollution Abatement in a Small Open Economy

Kausik Gupta () and Chhanda Mandal ()
Additional contact information
Kausik Gupta: Kausik Gupta, University of Calcutta
Chhanda Mandal: Muralidhar Girls’ College

Chapter Chapter 9 in International Trade, Resource Mobility and Adjustments in a Changing World, 2024, pp 177-185 from Springer

Abstract: Abstract The chapter deals with the contentious issue related to environmental impact of foreign direct investment (FDI) in the presence and in the absence of technology transfer and attempts to search for the best way to abate pollution among alternative policy issues. A three-sector general equilibrium model which is a simple extension of the model of Beladi and Marjit (1992) has been considered where the domestic manufacturing sector pollutes the environment. It is assumed that FDI in terms of foreign capital flows to a foreign enclave that uses sector-specific foreign capital. Technology transfer takes place through FDI and it has spill-over effects on the rest of the economy. It is assumed that the foreign enclave transfers environmentally sound technology (EST) to the domestic manufacturing sector and for this purpose we have assumed Hicks-neutral-type technical progress function for the manufacturing sector. The chapter examines the impact of FDI both in the presence and in the absence of EST. It shows that FDI in the absence and presence of transfer of EST to the domestic manufacturing sector, contrary to the popular belief, increases the level of pollution in the economy under some reasonable assumptions. A better measure of pollution abatement would have been tax for controlling pollution.

Keywords: FDI; Pollution abatement; Technology transfer; Environmentally sound technology (search for similar items in EconPapers)
JEL-codes: F11 F18 F64 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:conchp:978-981-97-5652-0_9

Ordering information: This item can be ordered from
http://www.springer.com/9789819756520

DOI: 10.1007/978-981-97-5652-0_9

Access Statistics for this chapter

More chapters in Contributions to Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().