Environmental regulation and FDI attraction: a bibliometric analysis of the literature

Although concerns about the environment have been raised by some governments and the public in general, literature has explored the possibility that Foreign Direct Investment (FDI) may flow from countries with strict environmental regulations to countries where the regulations are less stringent-the pollution haven hypothesis (PHH). In response to that tendency, some countries may implement less stringent regulations, in order to attract FDI, resulting in the race to the bottom effect (RTB). As the number of studies on this topic has expanded dramatically in the last two decades, the present work intends to provide an updated literature review on the relationship between FDI and environmental regulations. Through a bibliometric analysis, we evaluate the relevance of existing studies and identify possible trends. Results show that there is considerable empirical evidence for the PHH, but fewer studies confirm the RTB, and that topic has been increasingly analysed.

Automated summary

Literature explores the possibility of Foreign Direct Investment flowing from countries with strict environmental regulations to those with less stringent regulations, leading to the pollution haven hypothesis. Some countries may relax their regulations to attract FDI, resulting in the race to the bottom effect. While there is ample empirical evidence supporting the pollution haven hypothesis, fewer studies confirm the race to the bottom effect, but interest in this topic is increasing.