Investigating the Effects of the Global Economy on Policy and Practice in Developing Countries: Foreign Direct Investment and the Environment
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Date
2020-09-24
Authors
Neafie, Jessica
Journal Title
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Publisher
University of Oregon
Abstract
Is foreign direct investment (FDI) good for the environment in developing countries? Every year the number of foreign investors in developing countries grows, and its importance leads developing nations to make the political environment more hospitable for foreign investors that seek access to natural resources and new markets. I contribute to the debate over the influence of globalization on the environment by asking: Do the effects of multinational corporations (MNCs) on a developing country’s environment reflect the commitment of the source country to environmental protection?
Existing literature suggests that international economic flows are channels by which countries providing investment financing can influence the regulatory standards in the recipient country. This dissertation explores the possibility of a source effect, where countries receiving FDI begin to reflect the environmental practices of those MNCs providing FDI. In a mixed-methods research study, I use content analysis and large-n quantitative analysis to evaluate (i) what distinguishes the effects on environmental protection of FDI from multi-national corporations (MNCs) from different source countries; and, (ii) how does FDI from MNCs from different source countries lead to different outcomes in recipient countries. I find preliminary evidence that suggests that levels of development of the source countries of FDI significantly influence whether FDI improves or degrades environmental quality in recipient countries.
I demonstrate that the increasing flow of FDI from developing countries is leading to pressures for and evidence of declining environmental standards and outcomes in recipient countries. This dissertation provides preliminary evidence supporting a new perspective on international economic flows, showing a ‘source effect’ in which the strength of concern regarding and interest in protecting the environment in the source country for FDI has an impact on the degree to which environmental outcomes are promoted in recipient countries.
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Keywords
developing countries, development, environment, foreign direct investment, globalization, natural resources