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Pollution Haven or Halo? Evidence from Foreign Acquisitions in Indonesia

Inessa Love, Beata Javorcik () and Arlan Brucal ()
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Inessa Love: University of Hawaii

No 306, 2017 Meeting Papers from Society for Economic Dynamics

Abstract: The link between foreign ownership and environmental performance remains a controversial issue. This paper contributes to our understanding of this subject by analyzing the impact of foreign acquisitions on plant-level environmental performance. The analysis applies a difference-in-differences approach combined with coarsened exact matching to the data from the Indonesian Manufacturing Census for the period 1983-2001. It covers 264 acquisition cases where an acquired plant is observed a year before and at least three years after an ownership change and for which a carefully selected control plant exists. The results suggest that while foreign ownership increases the overall energy usage, due to expansion of output, it decreases the plant's energy intensity.

New Economics Papers: this item is included in nep-ene, nep-env and nep-sea
Date: 2017
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