The lesser of two evils: an empirical investigation of foreign direct investment-pollution tradeoff

Myeong Hwan Kim and Nodir Adilov

Applied Economics, 2012, vol. 44, issue 20, 2597-2606

Abstract: This article investigates the relationship between Foreign Direct Investment (FDI) and pollution measured by carbon dioxide (CO 2 ) emissions. The results suggest that while lax environmental regulations might attract FDI, the foreign companies utilize less polluting technology as compared to local firms in low-income countries. Thus, FDI does not necessarily increase pollution levels in the host countries. The findings, therefore, simultaneously support the pollution haven and the pollution halo hypotheses.

Date: 2012
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DOI: 10.1080/00036846.2011.566187

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