The effect of foreign direct investment on environmental pollution in selected countries

Subject Areas : Applied Economics

فاطمه زندی ¹ , سیما کلامی ²

1 - ندارد
2 - ندارد

Received: 2012-08-26 Accepted : 2012-12-01 Published : 2012-09-22

Keywords: Environment, foreign direct investment, chemical pollution of water,

Abstract :

During recent decades, as a result of globalization, we have witnessed unprecedeted increase in Foreign Direct Investment. Nevertheless, Foreign Direct Investment in pollutant industry is effective in inspiring the trend of economic growth, although it is known as one of the most important sources of disturbing the environment in the host country. In this respect, the main objective of this research is to explore the relation between FDI and the quality of environments (chemical pollution of water). To do so, firstly countries are divided in terms of development into two groups, including OECD countries and Non-OECD countries, and then using panel data method for period 1996-2007, the relationship between FDI and chemical pollution of water has been investigated. The results show that FDI inflows cause environmental problems in Non-OECD countries. In other words, the positive relationship between FDI inflows and pollution has been confirmed in these countries, while the negative relationship between the mentioned variables is confirmed in OECD countries.