International Journal of Scientific Research in Environmental Sciences (IJSRES), 1(6), pp. 92-100, 2013 Available online at http://www.ijsrpub.

com/ijsres ISSN: 2322-4983; 2013 IJSRPUB http://dx.doi.org/10.12983/ijsres-2013-p092-100

Review Paper Does FDI Promote MENA Regions Environment Quality? Pollution Halo or Pollution Haven Hypothesis
Maryam Asghari
Ph.D in Environmental Economics and International Trade; Assistant Professor, Shahid Ashrafi Esfahani University, Esfahan, Iran E-mail: Maryam.Asghari@ashrafi.ac.ir
Received 18 February 2013; Accepted 18 April 2013

Abstract. In the context of increasing globalisation of capital flows, the impact of foreign direct investment (FDI) on the environment is a topic of hot debate. Environmentalists have argued that gaps in national environmental standards draw the developed countries dirtiest industries to developing countries, creating "pollution havens" in environmental standards. Free marketers counter with claims that global market forces diffuse best management practices and those foreign companies, typically from the developed countries, create "pollution halos" in developing countries. This paper examines which hypothesis is valid in MENA selected region. The results indicate the validity of pollution Halo hypothesis in the region. Key words: FDI; Environment; Pollution Halo Hypothesis; Pollution Haven Hypothesis; MENA Region JEL Classification: O32, O44, O53, C23.

1. INTRODUCTION The complex relationship between Foreign Direct Investment (FDI) and the environment has been thoroughly investigated in recent years often with differing conclusions (Antweiler et al., 2001), Cole and Elliott, 2003; Frankel and Rose, 2005). No doubt, FDI promotes economic growth but also impacts environment negatively (Xing and Kolstad, 2002; He, 2006). Environmental regulations are essential means of internalizing the external environmental cost of firms economic activity. Therefore, in order to attract foreign investment, the governments of developing countries have a tendency to undermine environment concerns through relaxed or non-enforced regulation which is termed as pollution haven hypothesis ( PHH) in economic theory. As a result, companies like to shift their operations to these developing countries to take advantage of lower production cost which is known as industrial flight hypothesis. Both of these hypotheses lead to excessive pollution and degradation in environmental standard of the host countries. Due to the close correlation between a countrys per capita income and environmental stringency (Dasgupta et al., 1995), the PHH argues that developing countries will become pollution havens whilst the developed world will specialize in clean production. The PHH focuses on the cost effect of environmental regulations on firms, and presumes

that production cost differentials are a sufficient stimulus for firms to relocate their production facilities. Rationalizations for this view generally come from the notion that stricter regulatory regime for environmental standards will add to the costs of production through requirements for new equipment, the need to find alternative methods for disposal of waste due to rules against landfill, and restrictions on inputs and outputs. In the absence of any other factors, it is in a firms interest to relocate their production activities to countries with less stringent environmental regulations. The evidence from pollution heaven studies does not support general industrial flight hypothesis, but does argue that environmental regulations do influence some firms locational decisions, particularly in resource and pollution intensive sectors. An inherent empirical challenge to finding the pollution haven effect is how to deal with the potential endogeneity of environmental regulations. Much of the existing literature treats environmental regulations as exogenous (see Levinson, 2008 for a survey). Some recent studies start to tackle the potential endogeneity of environmental regulations, for example, by using either the instrumental variable approach (see Millimet and Roy, 2011, for a survey) or the propensity score matching method (Lu et al., 2012). The PHH studies could either consider plant locations or capital flows. List and Co (2000) also detect a weak relationship between stringent regulations and manufacturing plant locations.

92

Asghari Does FDI Promote MENA Regions Environment Quality? Pollution Halo or Pollution Haven Hypothesis

Employing a conditional logit model and using four measures of regulatory stringency, they find evidence that heterogeneous environmental policies across states affected foreign multinational corporations new plant location decisions from 1986 to 1993. However, the effect is of a relatively small magnitude compared to the effect of states other characteristics. In response to the problems raised by these cross-section analyses, Becker and Henderson (2000) examine effects of air quality regulation on U.S plant locations, using panel data for 1963-1992. They address problems of earlier plan location literature by using disaggregated state-level data and alternative measures of environmental regulation, as well as controlling for unobserved heterogeneity across locations. Their results indicate a significant negative effect of air regulation on plan births of polluting industries. Works of Greenstone (2002) and List et al. (2003) confirm this negative effect of stringent environmental regulation on plan location. In this literature on plant location, two additional studies be mentioned because they do not concern the United States. Smarzynska and Wei (2004) look at foreign investment decisions in 25economies in Eastern Europe and the former Soviet Union. They find some weak evidence for pollution havens when stringency of environmental policy is measured by participation in international environmental treaties, while results were not supported by robustness checks. Recently, in a study on China, Dean et al. (2009), demonstrate, through a conditional and nested logit analysis, that only equity joint ventures in highly polluting industries and from ethnically Chinese source countries (Hong-Kong, Macao, Taiwan) are attracted by weak environmental standards, whereas projects from industrial nations are not, regardless of their pollution industry. Dean et al. suggest that these findings could be explained by technological differences since developed countries may adopt newer and cleaner technologies regardless of the local standards. In contrast, it is also believed that foreign companies use better management practices and advanced technologies that result in clean environment in host countries (Zarsky, 1999). This is known as pollution haloes hypothesis. This implies that trends in environmental damage due to foreign direct investment are unsustainable. It is generally believed that foreign direct investment can have positive effect on host countrys development efforts. In addition to being the main source of external capital, the inflow of foreign investment also helps in filling the resource gap between the targeted investment and locally mobilized savings as well as the gap between targeted foreign exchange requirements and those

generated by net export earnings. Foreign direct investment also helps to develop managerial and specialized technological skills, innovations in the techniques of production, by means of training programmes and the process of learning by doing in the host country. Furthermore, FDI inflows also encourage the local enterprises to increase invest in the development projects and provides employment opportunities for both skilled and unskilled labor in the recipient country. Explanations as to why foreign owned firms might be cleaner than domestically owned firm generally all into two categories. Firstly, this cleanliness may be driven by factors which are external to the firm. For example, it has been argued that OECD based multinationals will typically utilize cleaner technology and possess more sophisticated environmental management system than many domestic firms in developing countries, often due to the more stringent regulatory environment that exists in the OECD (Zarsky, 1999). Pressure to continue to use such technologies in their affiliates in developing countries may arise because such multinationals may have large export markets in OECD countries where they have to meet the requirements of environmentally aware consumers. As Wallace (1996) and (Zarsky, 1999) note, such technologies may also be indirectly passed on to domestic firms via, for example, backward or forward linkages. Secondly, foreign owned firms may be cleaner than domestically owned firms for reasons that are internal to the firm, for example due to the firms management practices. In regard to the question whether the host states environmental standards is positively affected by the states foreign exposure, literature has exhibited mixed results. World Bank studies by Dasgupta et al. (1998) find that greater environmental performance is more attributable to the transfer of new technology and facilities rather than stricter environmental regulation in the host state.1 Despite this, two other World Bank studies by Wheeler et al. (1997) and Pargal and Wheeler (1995) found that firm-level environmental performance is unaffected by foreign links. Factors such as age, size and community pressure have been more important in raising environmental standards than foreign investor involvement.2 Empirical evidence also shows that in some sectors, particularly energy intensive and technology based, pollution haloes hypothesis is supported (Blackman and Wu, 1998, BIAC, 1999).
1

- See Dasgupta, S., Mody, A., Roy, S., & Wheeler, D, R., (1995). 2 - Wheeler, D. Hartman, R.S. and Huq, M., (1997) and Pargal, S. & Wheeler, D., (1995).

93

International Journal of Scientific Research in Environmental Sciences (IJSRES), 1(6), pp. 92-100, 2013

The aim of this paper is the validity test of pollution Halo and pollution Haven hypothesis in the MENA selected countries. The remainder of the paper is organized as follows: the following section provides an overview of the relation between environmental quality and FDI; Section 3 discusses empirical specifications, describes the data and the results and Section 4 concludes. 2. ENVIRONMNTAL OUTCOMES UNDER FDI In 1991, Grossman and Krueger (1991) found that the long-term relationship between economic growth and environment quality was an inverted U-shaped curve. The phenomenon has been labeled as Environmental Kuznets Curve (EKC) by Panayotou (1993) later. The EKC hypothesizes that environment quality deteriorates with the increase of per capita income at the early stage of economic growth and gradually improves when the country reaches to a certain level of affluence. Several authors have tried to explain the downward segment of EKC in different ways. Developed countries have fairly stable production structures, whereas rapidly industrializing and developing countries have unstable production structure and the effects of structural change on emissions may be less obvious. The primary sector (agriculture, fisheries, forestry, and mining) tends to be more resource-intensive than either the secondary (industry) or tertiary (services) sectors. The industry (especially manufacturing), on the other hand, tends to be more pollution-intensive than either agriculture or services. Since the structure of the economy (sectoral composition of output) changes with economic growth, part of the effect of increases in income per capita on environmental degradation reflects the effects of changing composition of output. In the case of pollution, we represent economic structure by the share of industry in GDP and expect a positive relationship with environmental degradation. Since the share of industry in GDP first rises with economic growth and then declines as the country moves from the pre-industrial to the post-industrial stage of development, we expect an inverted-U shaped relationship between environmental pollution and income level while controlling for all other influences transmitted through income. The importance of trade in combination with composition of economic activity is investigated in the decomposition of EKC for CO concentrations
2

of environmental quality to go along with their increased prosperity. The modified EKC analysis can be used to compare the differences in EKC between countries (developed and developing specifically, as long as enough data exists) due for instance to inter-country variations in the presence of corruption. One of the determinants of environmental policy is the sociopolitical regime of a particular country. Corruption and rent-seeking behaviour can influence the relationship between income and environment (Lopez and Mitra, 2000). However, for any level of per capita income, the pollution levels corresponding to corrupt behavior are always above the socially optimal level. So, the turning point of EKC takes place at income and pollution levels above those corresponding to the social optimum, which depends on the existing social institutions. Institutional changes triggered by citizens demand for cleaner environments are more likely to occur in developed countries than in developing. 3. EMPIRICAL ANALYSIS 3.1. Specification and Methodology Economic growth through rapid industrialization and growing environmental consequences has generated a heated debate on how economic growth is linked with environment. The linkage of environmental quality with economic growth evoked much discussion in last decade. Empirical studies (e.g. Grossman and Krueger, 1991; Selden and song, 1994; Rothman, 1998) supported an inverted Ushaped relationship between environmental degradation and economic growth. All of these studies supported the hypothesis that environmental degradation increases initially, reaches a maximum and after that declines as economy develops further. This systematic inverse U- shaped relationship has been termed as Environmental Kuznets Curve (EKC). Reduced form model is commonly used to test the EKC. This paper also exploits the reduced form model to analyze the relationship between pollution and FDI using countries data. Concerning the possible impacts of openness, FDI inflow, population, composition of production, corruption and environmental policy on the relations, all these factors are to be included in this model. As openness is the ratio of imports+exports to GDP and corruption perception index (CPI) score relates to perceptions of the degree of corruption as seen by business people and country analysts, and ranges between 10 (highly clean) and 0 (highly corrupt) in this model. The model is as the following:

across countries (Kaufmann et al., 1998). People, at low-income levels, are more concerned with food and other material needs and less concerned with environmental quality. People, at higher income levels, begin to demand higher levels

94

Asghari Does FDI Promote MENA Regions Environment Quality? Pollution Halo or Pollution Haven Hypothesis

Here: i: country; t: year; : the country specific effects; : the time specific effects; E it : annual CO2 emissions/discharge of industrial pollutants; Yit : real GDP per capita; : share of industry in GDP; OPit : openness; FDIINit : realized FDI inflow; POPit : population; ERit : proxy of the stringency of environmental regulation for different pollutant; CPI it: corruption perception index (CPI); : disturbance term. To measure the stringency of environmental regulation ERit , I construct an index of participation in environment protection agreement. The Montreal Protocol is widely considered as the most successful environment protection agreement. The Protocol sets out a mandatory timetable for the phase out of ozone depleting substances. This timetable has been reviewed regularly, with phase out dates accelerated in accordance with scientific understanding and technological advances. The Montreal Protocol sets binding progressive phase out obligations for developed and developing countries for all the major ozone depleting substances, including CFCs3, halos and less damaging transitional chemicals such as HCFCs. The Multilateral Fund, the first financial mechanism to be created under an international treaty, was created under the Protocol in 1990 to provide financial assistance to developing countries to help them achieve their phase out obligations. 3.2. Empirical Results In order to answer the research question presented in the introduction of this study, this section analyses econometrically the impact of FDI and the determinants of Environmental quality for MENA selected countries (Iran, Oman, Bahrain, Jordan,
3

Kuwait, Saudi Arabia) during 1980-2011. Data are obtained from the World Banks 2012 World Development Indicators (WDIs) CD-Rom and online WDI 2011.4 In relevant economic literature, different approaches are used to analyze dynamic relationship between foreign direct investment and environment. These approaches are: (i) pooled ordinary least square (POLS), (ii) one-way fixed effects (OEF). It should be noted that fixed effects approach is better in case of unobservable country-effects and unobservable time- effects and (iii) one way random effects is also used (Baltagi, 2001), Johnston and Dinardo (1997) considered that panel data model is useful because it handles problem of relevant omitted variables. Moreover, panel data model accommodates the special heterogeneity which is indicated by region specific, nonobservable and time invariant intercepts. This implies that panel data controls for non-observable effects by means of two different models: a fixed effect model and a random effect model. When dealing with time-series data, the possibility of unit roots in a series raises issues about parameter inference and spurious regression (Wooldridge, 2000). For example, OLS regression involving non-stationary series no longer provides the valid interpretations of the standard statistics such as t -statistics, F -statistics, and confidence intervals. To avoid this problem, non-stationary variables should be differentiated to make them stationary. To determine the existence of a unit root in the series, Im, Pesaran and Shin (2003) (IPS) and Maddala and Wu (1999) (MW) proposed a procedure to test the null hypothesis of a unit root against the alternative of at least one stationary series, by using the (Augmented) Dickey-Fuller (ADF) statistic across the cross-sectional units of the panel. The results show that the levels of all the series are stationary (Table 1).

- A chlorofluorocarbon (CFC) is an organic compound that contains carbon, chlorine, and fluorine, produced as a volatile derivative of methane and ethane. A closely related group of compounds are the hydrochlorofluorocarbons (HCFCs), which contain hydrogen, as well. They are also commonly known by the DuPont brand name Freon. The most common representative is dichlorodifluoromethane (R-12 or Freon-12). Many CFCs have been widely used as refrigerants, propellants (in aerosol applications), and solvents. The manufacture of such compounds has been phased out (and replaced with products such as R-410A) by the Montreal Protocol because they contribute to ozone depletion in the upper atmosphere.

- http://publications.worldbank.org/wdi

95

International Journal of Scientific Research in Environmental Sciences (IJSRES), 1(6), pp. 92-100, 2013

Table a: Variables Stationarity Tests in Mena Region

Variables E it Y it Y2
it

OPit FDIINit POPit ERit CPI it

Im, Pesaran and Shin Test Statistic Prob 3.1135 0.0000 7.1963 0.0000 5.8455 0.0000 2.4775 0.0000 7.3911 0.0000 4.9506 0.0000 4.2302 0.0000 5.3696 0.0000 2.4741 0.0000

One approach to model these unit effects is to use fixed effects, which, instead of assuming a common intercept for all units, allows each unit to have its own intercept (Beck, 2001; Hsiao, 2003; Wilson & Butler, 2007). Instead of treating these unit effects as a fixed effect, one could also conceive of this unit-specific effect as a random variable. On the assumption that the unit effects are not correlated with the explanatory variables, using random effects will yield an unbiased and more efficient estimation than fixed effects (Hsiao, 2003). However, if the assumption is violated, estimates will be biased. Using a Hausman test clearly indicates that random effects are not appropriate in this context. The F-test is also significant indicating the best fit of the estimated model. The Breusch-Pagan Lagrange multiplier (LM) test for effect random helps you decide between a random effects regression and a simple OLS regression. The null hypothesis in the LM test is that variances across entities are zero. This is no significant difference across units (i.e. no panel effect). I use Breusch-Pagan LM test of independence for cross-sectional dependence/contemporaneous correlation. According to Baltagi, cross-sectional dependence is a problem in macro panels with long time series (over 20-30 years). This is not much of a problem in micro panels (few years and large number of cases). The null hypothesis in the B-P/LM test of independence is that residuals across entities are not correlated. Serial correlation tests apply to macro panels with long time series (over 20-30 years). Not a problem in micro panels (with very few years). Serial correlation causes the standard errors of the coefficients to be smaller than they actually are and higher R-squared. One can use Wooldridge test for autocorrelation in panel data and Modified Wald test for groupwise heteroskedasticity in fixed effect regression model. The all coefficients of the variables except real GDP per capita square and corruption perception

index are significantly. Since increased economic activity results in increased levels of resource use and waste generation, so level of environmental degradation increase. I found a positive relationship between share of industry in GDP and environmental degradation. Because the regions productions move from the pre-industrial to the post-industrial stage of development. Openness and population increase pollution as they increase dirty economic activity and resources exploitation. The participation in environment protection agreement helps to regions environmental quality improvement. The negative coefficient of FDI inflow indicates that foreign direct investment inflow helps to develop managerial and specialized technological skills, innovations in the techniques of production, such technologies may also be indirectly passed on to domestic firms via, for example, backward or forward linkages. So, FDI inflow increase improves regions environmental quality. The results show that pollution Halo hypothesis is valid in MENA selected countries. 4. CONCLUSION The relationship between FDI and pollution levels could take various and opposite shapes. It should thus be investigated by robust empirical tests. For this reason, this paper provides new evidence on the pollution haven and pollution halo hypotheses. I tested the validity pollution haven and halo pollution hypotheses in the context of FDI by determining the correlations between carbon emission and FDI inflow, during 1980-2011 in MENA selected countries. The statistical results from correlation analysis show that FDI inflow has a week and statistically significant negative relationship with CO2 emission which suggests weak support for the halo pollution hypothesis, because FDI inflow brings cleaner environmental technology and improved environmental-management practices to the region.

96

Asghari Does FDI Promote MENA Regions Environment Quality? Pollution Halo or Pollution Haven Hypothesis

Table 2: The Determinants of Annual CO2 Emissions in Mena Region Variables Random Effect Fixed Effect(1) C -81649.05* (-3.21) -118911.3* (-4.80) Yit -.8499778 (-1.38) .718044** (2.77) 2 5.55e-06 (1.16) -3.80e-06 (0.194) Y it 1313.029* (4.21) 447.7409** * (1.92) 1470.771 (0.28) 6466.372** (2.04) OPit -4.53e-06* (-7.90) -2.89e-06* ( -8.58) FDIINit .0042775* (20.44) .0124279* (26.48) POPit 15003.39** (2.37) -8635.634** (-2.08) 4050.801 (1.05) 807.3322 (0.22) ERit 0.7764 0.9374 CPI it 6 6 R2 192 192 Groups 2725.16 Number of observation 0.0000 Wald Test 8.78 Prob > chi2 0.0000 Breusch and Pagan LM 2404.59 test 0.0000 Prob > chi2 Modified Wald Test for heteroskedasticity(3) Prob > chi2 Hausman Test(2) 36.74 Prob > chi2 0.0000 Wooldridge test for autocorrelation in panel 1120.762 data 0.0000 Prob > F
Note: T-statistics are shown in parentheses. Significance at the 99% and 95% confidence levels are indicated by * and **, respectively. The robust standard errors are Whites heteroskedasticity-corrected standard errors. (1). The acceptation of model by the Hausman test. (2). The Hausman test tests the null hypothesis that the coefficients estimated by the efficient random effects estimator are the same as the ones estimated by the consistent fixed effects estimator. If they are (insignificant P-value, Prob>chi2 larger than .05) then it is safe to use random effects. If you get a significant P-value, however, you should use fixed effects. (3). For FE regression model, the modified Wald test for groupwise heteroskedasticity is used while the Wooldridge test for autocorrelation in panel data (Ho: no autocorrelation) is applied.

REFERENCES Antweiler W, Copeland BR, Taylor MS (2001). Is Free Trade Good for the Environment?. American Economic Review, 91: 877-908. Baltagi BH (2001). Econometric analysis of panel data. 2nd edition. NY: John Wiley and Sons. Beck N, Katz JN ( 1996). Nuisance vs. Substance: Specifying and Estimating Time SeriesCross-Section Models. Political Analysis, 6(1): 136. Becker R, Handerson V (2000). Effects of Air Quality Regulations on Polluting Industries. Journal of Political Economy, 108(2): 379-421. Blackman A, Wu X ( 1998). Foreign direct investment in Chinas power sector: trends, benefits and barriers. Discussion Paper 98-50. Washington D.C. Resources for the Future.

September. Cole MA, Elliott RJR (2003). Determining the TradeEnvironment Composition Effect: The Role of Capital. Labour and Environmental Regulations. Journal of Environmental Economics and Management, 46(3): 363-83. Dasgupta S, Mody A, Roy S, Wheeler DR (1995). Environmental Regulation and Development: A Cross-Country Empirical Analysis. Policy Research Department. Working Paper No. 1448. Washington DC. World Bank. De Bruyn SM, Opschoor JB (1997). Developments in the throughput income relationship: theoretical and empirical observations. Ecological Economics, 20: 255268. Dean JM, Lovely ME, Wang H (2009). Are Foreign Investors Attracted to Weak Environmental Regulations? Evaluating the Evidence from

97

International Journal of Scientific Research in Environmental Sciences (IJSRES), 1(6), pp. 92-100, 2013

China. Journal of Development Economics, 90(1): 1-13. Dinda S (2000). Air quality and economic growth: an empirical study. Ecological Economics, 34(3): 409-423. Elliot G, Rothenberg T and Stock J (1996). Efficient tests for an autoregressive unit root. Econometrica, 64(4): 813-836. Frankel, J. A. and A. K. Rose, 2005. Is Trade Good or Bad for the Environment? Sorting Out the Causality. The Review of Economics and Statistics, 87(1): 85-91. Frield, B. and M. Getzner, 2003. Determinants of CO2 emissions in a small open economy. Ecological Economics, 45(1): 133-148. Gawande K, Bohara AK, Berrens RP, Wang P (2000). Internal Migration and the Environmental Kuznets Curve of US Hazardous Wastes Sites. Ecological Economics, 33: 151-166. Greenstone M (2002).The impacts of Environmental Regulations on Industry Activity: Evidence from the 1970 and the 1977 Clean Air Act amendments and the Census of Manufactures. Journal of Political Economy, 110(6): 11751219. Grossman GM, Krueger AB (1991). Environmental Impacts of a North American Free Trade Agreement. NBER Working Paper No. 3914. He J (2006). Pollution haven hypothesis and environmental impacts of foreign direct investment: the case of industrial emission of sulfur dioxide (SO2) in Chinese province. Ecological Economics, 60: 228-245. Hsiao C (2003). Analysis of Panel Data. Cambridge University Press, Cambridge. Im K, Pesaran MH, Shin Y ( 2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115: 53-74. Johnston J, Dinardo J (1997). Econometrics Methods. 4. ed. Singapore: McGraw-Hill International Editions. Kaufnann RK, Davidsdttir B, Garnham S, Pauly P (1998). The determinants of atmospheric SO2 concentrations: reconsidering the environmental Kuznets curve. Ecological Economics. special issue on EKC. Komen MHC, Gerking S, Folmer H (1997). Income and environmental R&D: empirical evidence from OECD countries. Environment and Development Economics, 2(4): 505515 Labys WC, Wadell MM (1989). Commodity lifecycles in US materials demand. Resources policy, 15(3): 238-252. List JA, Co C ( 2000). The Effects of Environmental Regulations on Foreign Direct Investment.

Journal of Environmental Economics and Management, 40(1): 1-20. List JA, McHone WW, Millimet DL, Fredriksson PG ( 2003). Effects of Environmental Regulation on Manufacturing Plant Birth: Evidence from a Propensity Score Matching Estimator. Review of Economics and Statistics, 85(4): 944-952. Lopez R, Mitra S (2000). Corruption, pollution and the Kuznets environmental curve. Journal of Environmental Economics and Management, 40: 137-150. Lu Yi, Wu Mingqin, Yu Linhui (2012). Is There a Pollution Haven Effect? Evidence from a Natural Experiment in China, working Paper, Munich Personal RePEc Archive (WPRA). Maddala GS, Wu S ( 1999). A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, 61: 631-652. Magnani E (2001). The Environmental Kuznets Curve: development path or policy result?. Environmental modeling and software. 16(2): 157-165. Millimet Daniel L. and Joyjit Roy. (2011). Three New Empirical Tests of the Pollution Haven Hypothesis When Environmental Regulation is Endogenous, working paper. Munasinghe M (1999). Is environmental degradation an inevitable consequence of economic growth: tunneling through the environmental Kuznets curve?. Ecological Economics, 29(1): 89-109. OECD ( 1999). BIAC Discussion Paper on FDI and the Environment. Paper presented at an OECD Conference on Foreign Direct Investment and the Environment. 28-29 January. The Hague. Netherlands. Panayotou T ( 1993). Empirical Tests and Policy Analysis of Development. ILO Technology and Employment Programme Working Paper. WP238. Pargal S, Wheeler D ( 1995). Informal Regulation of Industrial Pollution in Developing Countries: Evidence from Indonesia. The World Bank Environment. Infrastructure and Agriculture Divisions: Policy Research Department. World Bank. Washington D.C. Rothman D (1998). Environmental Kuznets Curvesreal progress or passing the buck? A case for consumption- based approaches. Ecological Economics, 25: 177-794 Selden Thomas M, Song D ( 1995). Neoclassical Growth, the J Curve for Abatement, and the Inverted U Curve for Pollution. Journal of Environmental Economics and Management, 29(2): 162-168

98

Asghari Does FDI Promote MENA Regions Environment Quality? Pollution Halo or Pollution Haven Hypothesis

Smarzynska Javorcik B, Wei SJ ( 2004). Pollution Havens and Foreign Direct Investment: Dirty Secret or Popular Myth?. Contributions to Economic Analysis and Policy, 3(2): 1-32. Smulders S, Bretscher L (2000). Explaining Environmental Kuznets Curves: How Pollution Induces Policy and New Technology. Tilburg University Center Working Paper No. 2000-95. Wheeler D, Hartman RS, Huq M (1997). Why Paper Mills Clean Up: Determinants of Pollution Abatement in Four Asian Countries. The World Bank, Environment. Infrastructure and Agriculture Divisions: Policy Research Department. World Bank. Washington D.C. Wilson SE, Butler DM (2007). A lot more to do: The Sensitivity of Time-Series Cross-Section

Analyses to Simple Alternative Specifications. Political Analysis, 15(2): 101 123. Wooldridge J ( 2000). Introductory Econometrics: A Modern Approach. Mason, OH: SouthWestern College Publishing. Xing Y, Kolstad C ( 2002). Do lax environmental regulations attract foreign investment?. Environmental and Resource Economics, 21: 122. Zarsky L (1999). Havens, halos and spaghetti: untangling the evidence about foreign direct investment and the environment. OECD conference on foreign direct investment and the environment. Paris.

99

International Journal of Scientific Research in Environmental Sciences (IJSRES), 1(6), pp. 92-100, 2013

Assistant Professor Dr. Maryam Asghari got B.A in Mathematics from Isfahan University/Iran in 1998. She obtained M.A in economic science from Islamic Azad University, Khorasgan / Iran in 2002. She researched in CEMAFI laboratory, Sophia-Antipolis-Nice University/France, for receiving PH.D over 2003-2009. She published many papers in international and Iranian journals the issues of environmental economics, international economics, tourism and national security. She teaches many courses such as natural resources, energy economics and microeconomics in Shahid Ashrafi Esfahani University, Iran. She is the manager of research department of this university. Dr. Maryam Asghari got best researcher award in Esfahan province in 2012. She is The Director-inChief of International Journal of Economic Research and Analysis and cooperates closely with several international journals.

100