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Among traditional determinants of FDIs – is environmental laxity a new driver?

Schlögl, Hubertus Tassilo (2015) Among traditional determinants of FDIs – is environmental laxity a new driver?

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Abstract:Foreign direct investments (FDIs) are an important tool for corporations to access new markets, channels, and cheaper production. The body of literature is quite extensive about the determinants of FDIs. Among the traditional determinants, the literature lists market size, growth rate, exchange rates, liberalization, infrastructure and taxes as the most frequent cited determinants of FDIs. However, to what extent environmental regulations can be seen as a determinant of FDIs has not been elaborated intensively. In order to verify this, the article uses three different scales as proxies how environmental regulations are handled, since there is no observable indicator. Therefore, the paper’s aim is to discover to what extent different handling of environmental regulations is influencing FDI inflows of countries. For the period of 2000 – 2005, these three different proxy variables will be tested using a mixed linear model to verify how the lax handling of environmental regulations affects the FDI inflows. A strong significant relationship has been found using the proxy variable including SO2 as emission variable when testing the laxity over the years 2000 – 2005. Therefore one can conclude that environmental regulations, when using laxity as a proxy, are indeed a determinant of FDIs.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:International Business Administration BSc (50952)
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