Does Environmental Governance Matter for Foreign Direct Investment? Testing the Pollution Haven Hypothesis for Indian States
This paper attempts to examine the role of environmental governance on foreign direct investment by testing the pollution haven hypothesis for 21 Indian states for the period 2002–2010. To test for the hypothesis, this study computes an abatement expenditure index adjusted for industrial composition...
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| Format: | Article |
| Language: | English |
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World Scientific Publishing
2018-03-01
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| Series: | Asian Development Review |
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| Online Access: | https://www.mitpressjournals.org/doi/pdf/10.1162/adev_a_00106 |
| _version_ | 1818723410138628096 |
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| author | Vinish Kathuria |
| author_facet | Vinish Kathuria |
| author_sort | Vinish Kathuria |
| collection | DOAJ |
| description | This paper attempts to examine the role of environmental governance on foreign direct investment by testing the pollution haven hypothesis for 21 Indian states for the period 2002–2010. To test for the hypothesis, this study computes an abatement expenditure index adjusted for industrial composition at the state level using Annual Survey of Industries plant-level data. The methodology used is based on that proposed by Levinson (2001). The index compares actual pollution abatement expenditures in a particular state, unadjusted for industrial composition, to predicted abatement expenditures in the same state. (The predictions are based on nationwide abatement expenditures by industry and each state's industrial composition.) If the adjusted index is low for a state, it implies that the state has poor environmental governance, which would be expected to induce foreign firms to invest. However, the results do not find any evidence of the pollution haven hypothesis in the Indian context. Other infrastructure and market-access-related variables are more important in influencing a foreign firm's investment decisions than environmental stringency. |
| first_indexed | 2024-12-17T21:10:04Z |
| format | Article |
| id | doaj.art-baca67f888f84feaa9d1a4dec53104d7 |
| institution | Directory Open Access Journal |
| issn | 0116-1105 1996-7241 |
| language | English |
| last_indexed | 2024-12-17T21:10:04Z |
| publishDate | 2018-03-01 |
| publisher | World Scientific Publishing |
| record_format | Article |
| series | Asian Development Review |
| spelling | doaj.art-baca67f888f84feaa9d1a4dec53104d72022-12-21T21:32:29ZengWorld Scientific PublishingAsian Development Review0116-11051996-72412018-03-013518110710.1162/adev_a_00106adev_a_00106Does Environmental Governance Matter for Foreign Direct Investment? Testing the Pollution Haven Hypothesis for Indian StatesVinish Kathuria0Professor, Shailesh J. Mehta School of Management, Indian Institute of Technology, Mumbai, India. E-mail: vinish.kathuria@gmail.comThis paper attempts to examine the role of environmental governance on foreign direct investment by testing the pollution haven hypothesis for 21 Indian states for the period 2002–2010. To test for the hypothesis, this study computes an abatement expenditure index adjusted for industrial composition at the state level using Annual Survey of Industries plant-level data. The methodology used is based on that proposed by Levinson (2001). The index compares actual pollution abatement expenditures in a particular state, unadjusted for industrial composition, to predicted abatement expenditures in the same state. (The predictions are based on nationwide abatement expenditures by industry and each state's industrial composition.) If the adjusted index is low for a state, it implies that the state has poor environmental governance, which would be expected to induce foreign firms to invest. However, the results do not find any evidence of the pollution haven hypothesis in the Indian context. Other infrastructure and market-access-related variables are more important in influencing a foreign firm's investment decisions than environmental stringency.https://www.mitpressjournals.org/doi/pdf/10.1162/adev_a_00106abatement expenditureenvironmental governanceIndiapollution haven hypothesis |
| spellingShingle | Vinish Kathuria Does Environmental Governance Matter for Foreign Direct Investment? Testing the Pollution Haven Hypothesis for Indian States Asian Development Review abatement expenditure environmental governance India pollution haven hypothesis |
| title | Does Environmental Governance Matter for Foreign Direct Investment? Testing the Pollution Haven Hypothesis for Indian States |
| title_full | Does Environmental Governance Matter for Foreign Direct Investment? Testing the Pollution Haven Hypothesis for Indian States |
| title_fullStr | Does Environmental Governance Matter for Foreign Direct Investment? Testing the Pollution Haven Hypothesis for Indian States |
| title_full_unstemmed | Does Environmental Governance Matter for Foreign Direct Investment? Testing the Pollution Haven Hypothesis for Indian States |
| title_short | Does Environmental Governance Matter for Foreign Direct Investment? Testing the Pollution Haven Hypothesis for Indian States |
| title_sort | does environmental governance matter for foreign direct investment testing the pollution haven hypothesis for indian states |
| topic | abatement expenditure environmental governance India pollution haven hypothesis |
| url | https://www.mitpressjournals.org/doi/pdf/10.1162/adev_a_00106 |
| work_keys_str_mv | AT vinishkathuria doesenvironmentalgovernancematterforforeigndirectinvestmenttestingthepollutionhavenhypothesisforindianstates |