Tax Policy and Environmental Impact of FDI: Empirical Evidence in Developing Countries

Muoi Mot Huynh Van () and Trung Kien Tran ()
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Muoi Mot Huynh Van: Tra Vinh University, Tra Vinh, Vietnam
Trung Kien Tran: University of Economics Ho Chi Minh City, Ho Chi Minh City, Vietnam

Economic Research Guardian, 2021, vol. 11, issue 1, 144-155

Abstract: The paper empirically analyzes the role of tax policy in FDI-Environmental pollution nexus in developing countries from 2004 to 2016. In general, FDI has a significant effect to increase air pollution in these countries supporting the pollution haven hypothesis. Interestingly, the government plays a crucial role to adjust the environmental impacts of FDI. When the higher quality of institution helps to reduce air pollution, the tax policy has both the direct effect to reduce the level of environmental degradation and the indirect effect through mitigating the harmful environmental impact of FDI in this case.

Keywords: Environment Pollution; FDI; Tax policy; GMM; Developing countries (search for similar items in EconPapers)
JEL-codes: F21 F64 H20 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:wei:journl:v:11:y:2021:i:1:p:144-155

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