Vinish Kathuria
Does Environmental Governance Matter for Foreign Direct Investment? Testing the Pollution Haven Hypothesis for Indian States
Indian Institute of Technology Bombay
paper attempts examine role environmental governance foreign direct investment testing pollution hypothesis 21 indian states period 20022010 test hypothesis study computes abatement expenditure index adjusted industrial composition state level using annual survey industries plantlevel data methodology used based proposed levinson 2001 index compares actual pollution abatement expenditures particular state unadjusted industrial composition predicted abatement expenditures state predictions based nationwide abatement expenditures industry states industrial composition adjusted index low state implies state poor environmental governance would expected induce foreign firms invest however results find evidence pollution hypothesis indian context infrastructure marketaccessrelated variables important influencing foreign firms investment decisions environmental stringency