2014•Frontiers of economics and globalisationRequires access

Environmental Regulation and the Heterogeneity of Industrial Selection of Foreign Investment

Boqiong Yang, Xiaobing Wang, Jun Yang

Abstract

The huge flow of foreign direct investment (FDI) in recent decades has prompted concern among policy-makers and researchers regarding its impact on the environment, as well as its contribution to China’s economic growth. In this study, by combining FDI and trade pollution theory, we establish a model to evaluate the impact of FDI on pollution, which facilitates testing the “pollution haven” hypothesis. Our results indicate that FDI is concentrated in pollution-intense industries. Moreover, it is necessary to undertake further research on FDI pollution with new data after environmental regulation.

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Key concepts: Foreign direct investment, Pollution haven hypothesis, Haven, Pollution, China, Environmental pollution, International economics, Investment (military)