American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
US Environmental Regulation and FDI: Evidence from a Panel of US-Based Multinational Firms
American Economic Journal: Applied Economics
vol. 2,
no. 3, July 2010
(pp. 158–89)
Abstract
This paper measures the response of US-based multinationals to the Clean Air Act Amendments (CAAA). Using a panel of firm-level data over the period 1966-1999, I estimate the effect of regulation on a multinational's foreign production decisions. The CAAA induced substantial variation in the degree of regulation faced by firms, allowing for the estimation of econometric models that control for firm-specific characteristics and industrial trends. I find that the CAAA caused regulated multinational firms to increase their foreign assets by 5.3 percent and their foreign output by 9 percent. Heavily regulated firms did not disproportionately increase foreign investment in developing countries. (JEL F23, K32, L51, Q52, Q53, Q58)Citation
Hanna, Rema. 2010. "US Environmental Regulation and FDI: Evidence from a Panel of US-Based Multinational Firms." American Economic Journal: Applied Economics, 2 (3): 158–89. DOI: 10.1257/app.2.3.158Additional Materials
JEL Classification
- F23 Multinational Firms; International Business
- K32 Environmental, Health, and Safety Law
- L51 Economics of Regulation
- Q52 Pollution Control Adoption Costs; Distributional Effects; Employment Effects
- Q53 Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- Q58 Environmental Economics: Government Policy
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