The effect of FDI on environmental emissions: Evidence from a meta-analysis
Binyam Afewerk Demena and
Sylvanus Afesorgbor ()
Energy Policy, 2020, vol. 138, issue C
One important and frequently-raised issue about foreign direct investment (FDI) is the potentially negative consequences for the environment. The potential environmental cost due to increased emissions may undermine the economic gains associated with increases in FDI inflow. Although the literature is dominated with this adverse view of FDI on the environment, there is also a possibility that FDI can contribute to a cleaner environment, especially, if FDI comes with green technologies and this creates spillovers for domestic industries. Theoretically, the effect of FDI on the environment can be negative or positive. To deal with the theoretical ambiguity about the FDI-environment nexus, many empirical studies have been conducted but their results only reinforce the controversy as they produce contrasting results. We conduct a meta-analysis of the effect of FDI on environmental emissions using 65 primary studies that produce 1006 elasticities. Our results show that the underlying effect of FDI on environmental emissions is close to zero, however, after accounting for heterogeneity in the studies, we find that FDI significantly reduces environmental emissions. Results remain robust after disaggregating the effect for countries at different levels of development as well as for different pollutants.
Keywords: FDI; Pollution haven hypothesis; Pollution halo hypothesis; Environment; Emissions; Meta-analysis (search for similar items in EconPapers)
JEL-codes: F21 F60 Q56 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: The effect of FDI on environmental emissions: Evidence from a meta-analysis (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:138:y:2020:i:c:s0301421519307773
Access Statistics for this article
Energy Policy is currently edited by N. France
More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().