Foreign Direct Investment and the Pollution Haven Hypothesis (in Persian)

Hamideh Esfahani () and Mahdi Naderi ()
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Hamideh Esfahani: Institute for Management and Planning Studies
Mahdi Naderi: Institute for Management and Planning Studies

The Journal of Planning and Budgeting (٠صلنامه برنامه ریزی و بودجه), 2017, vol. 21, issue 4, 3-14

Abstract: Environmental problems have become a critical global issue, especially the global warming issue resulting from increased greenhouse gases over the past few decades. Nevertheless, due to the importance of foreign direct investment (FDI) for some countries, they use their environment as a comparative advantage to attract FDI. In this study, by using a theoretical model, we review the pollution haven hypothesis and environmental standards in the direct presence of FDI. In this model, a foreign firm investing in the first country, competes with a domestic firm in the second country for exporting homogeneous goods to the third country. The results show that the pollution haven hypothesis is rejected when all firms operate with the same technology. However, if the firms have different technologies and pollution rates, the host country of FDI may also be the host and the haven of pollution.

Keywords: Greenhouse Gases; Foreign Direct Investment; Pollution Haven; Cournot Competition; Environmental Standards (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:auv:jipbud:v:21:y:2017:i:4:p:3-14

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