2019 Volume 12 Issue 1 Pages 1-16
Many previous studies have performed empirical analysis regarding the pollution haven hypothesis, which posits that investment is attracted to countries whose environmental regulations are lax. The results of some empirical studies seem to confirm the hypothesis, while the results of other empirical studies do not. This study performed empirical analysis on Japan, where society has matured and interest in environmental protection has grown. It studied whether foreign direct investment by three pollution-intensive sectors in the manufacturing industry (pulp and paper, chemical and pharmaceutical, ferrous and non-ferrous metals) has been influenced by the strictness of environmental regulations in twenty-four countries/regions in North America, Europe, and the Asia-Pacific region, using ratification of environmental treaties as a proxy for strictness. The results showed that some models of the pulp and paper sector and the chemical and pharmaceutical sector indicated positive pollution haven effects, and most models of the ferrous and non-ferrous metals sector indicated positive effects. This demonstrates the converse effect of pollution havens.
