| The empirical support for the pollution haven hypothesis is limited and it is primarily based on anecdotes and case studies. In the first chapter of my dissertation, I use a crosscountry analysis and a two-way error components regression model to analyze trade flows and industry composition changes of the most polluting industries in the manufacturing sectors in order to provide more robust evidence for the pollution haven hypothesis. Based on the theoretical foundation of the Heckscher-Ohlin model, I consider environmental regulatory stringency as one of the determinants which contribute to comparative advantage. The empirical results suggest that environmental regulatory stringency would decrease a country's net exports and production share of the most polluting industries. This lends support to the pollution haven hypothesis. In the second and third chapters of my dissertation, I examine whether this hypothesis holds for outward foreign direct investment using firm-level data from Taiwan. The empirical results suggest that Taiwanese manufacturing firms, on average, tend to invest in countries with less stringent environmental regulations, but the estimates also indicate that less polluting firms are more likely to seek pollution havens than are more polluting firms. The results are mixed. On the one hand, firms that spend more on environmental protection at home, invest more in countries with less stringent environmental regulations. On the other hand, I also find that less polluting firms have a higher propensity to invest in countries with less stringent environmental regulations. |
