The Structure of UK Outbound FDI And Environmental Regulation

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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%.
Original languageEnglish
Pages (from-to)65-96
Number of pages32
JournalEnvironmental and Resource Economics
Volume68
Issue number1
Early online date22 May 2017
DOIs
Publication statusPublished - Sep 2017

Bibliographical note

The final publication is available at Springer via http://dx.doi.org/10.1007/s10640-017-0145-4

Keywords

  • pollution-haven
  • competitiveness
  • environmental-regulation
  • industry-location
  • FDI

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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