The Pollution Haven Hypothesis: A Geographic Economy Model in a Comparative Study

Although based on theoretical foundations, the pollution haven hypothesis has never been clearly proven empirically. In this study, we re-examine this hypothesis by a fresh take on both its theoretical and empirical aspects. While applying a geographic economy model on French firm-level data, we confirm the hypothesis for the global sample. Through sensitivity analysis, we validate it for Central and Eastern European countries, emerging and high-income OECD countries, but not for the major part of the Commonwealth of Independent States countries. Finally, we show that the pollution haven hypothesis is confirmed in the strongest manner for emerging economies.FDI, Environmental Regulation, Economic Geography, Pollution Haven Hypothesis

The pollution haven hypothesis : a geographic economy model in a comparative study

Although based on theoretical foundations, the pollution haven hypothesis stating that heterogenous environmental regulations between countries influence multinational firms' location decisions, has never been clearly proven empirically. In this study, we reexamine this hypothesis by a fresh take on both its theoretical and empirical aspects. While applying a geographic economy model on French firm-level data, we confirm the pollution haven hypothesis for a global sample. Through sensitivity analysis, we validate it for Central and Eastern European countries, emerging and high-income OECD countries, but not for the major part of the Commonwealth of Independent States countries. Finally, we show that the pollution haven hypothesis is confirmed in the strongest manner for emerging economies.FDI, environmental regulation, economic geography, pollution haven hypothesis.

The pollution haven hypothesis: a geographic economy model in a comparative study

URL des Documents de travail : https://centredeconomiesorbonne.cnrs.fr/publications/Documents de travail du Centre d'Economie de la Sorbonne 2008.83 - ISSN : 1955-611XAlthough based on theoretical foundations, the pollution haven hypothesis stating that heterogenous environmental regulations between countries influence multinational firms' location decisions, has never been clearly proven empirically. In this study, we reexamine this hypothesis by a fresh take on both its theoretical and empirical aspects. While applying a geographic economy model on French firm-level data, we confirm the pollution haven hypothesis for a global sample. Through sensitivity analysis, we validate it for Central and Eastern European countries, emerging and high-income OECD countries, but not for the major part of the Commonwealth of Independent States countries. Finally, we show that the pollution haven hypothesis is confirmed in the strongest manner for emerging economies.Bien que se basant sur des fondements théoriques certains, l'hypothèse de "havre de pollution" selon laquelle les firmes multinationales accorderaient une grande importance dans leurs choix de localisation aux différences de réglementations environnementales, n'a pourtant jusque là jamais été clairement définie empiriquement. Afin de mieux cerner cette hypothèse, dans cette étude, nous la réexaminons en abordant aussi bien son aspect théorique que son aspect empirique. Ainsi, en tenant compte des problèmes rencontrés jusque là dans la littérature, et en se fondant sur un modèle d'économie géographique que nous appliquons à des données de firmes françaises, dans une première partie nous mettons en évidence l'hypothèse des havres de pollution pour notre échantillon global. Ensuite, à travers des tests de robustesse, nous validons cette hypothèse pour les Pays d'Europe Centrale et Orientale (PECO), les pays émergents et les pays de l'OCDE à revenus élevés inclus dans l'échantillon, mais pas pour la plupart des pays de la CEI. Finalement, nous démontrons que l'hypothèse des havres de pollution est la plus manifeste pour le cas des pays émergents