Does FDI Promote MENA Region’s Environment Quality? Pollution Halo or Pollution Haven Hypothesis

Abstract

In the context of increasing globalisation of capital flows, the impact of foreign direct investment (FDI) on the environment is a topic of hot debate. Environmentalists have argued that gaps in national environmental standards draw the developed countries' dirtiest industries to developing countries, creating havens in environmental standards. Free marketers counter with claims that global market forces diffuse best management practices and those foreign companies, typically from the developed countries, create halos in developing countries. This paper examines which hypothesis is valid in MENA selected region. The results indicate the validity of pollution Halo hypothesis in the region.