Technological Content and Institutional Quality of FDI: Investigating the effects on the environment in Brazil

Eduardo Polloni-Silva (), Herick Fernando Moralles () and Rosina Moreno ()
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Eduardo Polloni-Silva: Universidade Federal de Mato Grosso do Sul: Três Lagoas, Mato Grosso do Sul, Brazil.
Herick Fernando Moralles: Industrial Engineering Department, Universidade Federal de São Carlos, Brazil.
Rosina Moreno: AQR-IREA, Universitat de Barcelona, Spain.

No 202424, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics

Abstract: Research shows that Foreign Direct Investment (FDI) can be beneficial/harmful to the host’s environment. However, the mechanisms that explain these contrasting effects are still unclear. By employing a regional dataset on FDI in the State of Sao Paulo, Brazil, this study verifies how the technological content of the FDI may impact the host region. Additionally, applying the promises from the institution-based view, the origins of FDI and the institutional quality of these home countries were included. The results reject the commonly employed ‘one size fits all’ approach towards FDI, since both high-technology and low-technology FDI can be beneficial for the host’s sustainable development. Yet, the origins of these investments matter, and receiving FDI from countries with weaker institutions can be harmful, regardless of the sector. These findings have important implications for policymakers and future research focused on emerging economies, and the promised expectations of FDI should be revisited.

Keywords: CO2 Emissions Intensity; Sustainability; Foreign Direct Investment; São Paulo; Brazil. JEL classification: F18, O13, Q56, R11. (search for similar items in EconPapers)
Pages: 34 pages
Date: 2024-02, Revised 2024-02
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Persistent link: https://EconPapers.repec.org/RePEc:ira:wpaper:202424

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