The Structure of UK Outbound FDI and Environmental Regulation

Abay Mulatu

Environmental & Resource Economics, 2017, vol. 68, issue 1, No 4, 65-96

Abstract: Abstract We study whether the pattern of outbound Foreign Direct Investment (FDI) is influenced by host countries’ environmental regulations. We employ a general empirical location model that captures interactions between industry attributes and host country characteristics in determining firm location. We use data on UK-based multinational activity in 64 countries and 23 industries over the period 2002–2006. Our results suggest a significant effect of environmental policy on the pattern of UK outbound FDI—a pollution haven effect. A one standard deviation increase in environmental laxity increases FDI (assets) in industries that are above-average pollution intensive by 28%.

Keywords: Pollution-haven; Competitiveness; Environmental-regulation; Industry-location; FDI (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (15)

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DOI: 10.1007/s10640-017-0145-4

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