Do environmental characteristics influence foreign direct investment growth? A cross-national study, 1990-2000

The author engages several theoretical traditions in both economics and sociology to examine the impacts of levels of environmental efficiency and environmental institutions on foreign investment location in less-developed countries. Results from static score design panel OLS models of 52 countries provide mixed results. Less-developed countries with higher levels of carbon dioxide emissions per unit of gross domestic product attract higher levels of foreign investment, whereas less-developed countries with environmental ministries attract lower levels of foreign investment. Other independent variables-including sulfur dioxide emissions per unit of GDP, environmental treaty ratification, and environmental INGO presence/rate - show no statistically significant relationship with foreign investment location. The results underscore the continuing importance of the pollution havens hypothesis as well as the need for further research.