US Environmental Regulation and FDI: Evidence from a Panel of US-Based Multinational Firms
Abstract
This paper measures the response of US-based multinationals to the Clean Air Act Amendments (CAAA). Using a panel of firm-level data over the period 1966–1999, I estimate the effect of regulation on a multinational's foreign production decisions. The CAAA induced substantial variation in the degree of regulation faced by firms, allowing for the estimation of econometric models that control for firm-specific characteristics and industrial trends. I find that the CAAA caused regulated multinational firms to increase their foreign assets by 5.3 percent and their foreign output by 9 percent. Heavily regulated firms did not disproportionately increase foreign investment in developing countries. (JEL F23, K32, L51, Q52, Q53, Q58)
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Economic growth and the environment
Grossman, G. M., & Krueger, A. B. (1995) · The Quarterly Journal of Economics · doi:10.2307/2118443 · Cited by 9,901 · see citing works
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Martin, R., Muûls, M., de Preux, L. B., & Wagner, U. J. (2014) · American Economic Review · doi:10.1257/aer.104.8.2482 · Cited by 333 · see citing works
Embodied carbon emissions in the supply chains of multinational enterprises
Zhang, Z., Guan, D., Wang, R., Meng, J., Zheng, H., Zhu, K., & Du, H. (2020) · Nature Climate Change · doi:10.1038/s41558-020-0895-9 · Cited by 235 · see citing works
Koch, N., & Basse Mama, H. (2019) · Energy Economics · doi:10.1016/j.eneco.2019.04.018 · Cited by 148 · see citing works
- Authors
- Hanna, R.
- Affiliations
- National Bureau of Economic Research (US)
- Corresponding author
- Hanna, Rema
- ORCID
- Hanna, Rema
- Venue
- American Economic Journal: Applied Economics
- Publisher
- American Economic Association
- Published
- 2010-07-01
- Volume
- 2
- Issue
- 3
- Pages
- 158-189
- ISSN
- 1945-7782 (ISSN-L)
- 1945-7790
- OpenAlex
- W2114402118
- Cited by
- 263
- References
- 1
- Citations by year
- 2026: 7 · 2025: 34 · 2024: 20 · 2023: 28 · 2022: 28 · 2021: 25 · 2020: 17 · 2019: 20 · 2018: 10 · 2017: 14 · 2016: 9 · 2015: 10 · 2014: 13 · 2013: 9 · 2012: 7
- FWCI
- 23.21
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- American Economic Journal Applied Economics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Business, Management and Accounting › Strategy and Management › International Business and FDI
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Energy, Environment, Economic Growth
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Global trade and economics
- Keywords
- environmental regulation, foreign direct investment, Clean Air Act Amendments, multinational corporations, firm-level panel data, developing countries, air pollution regulation
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