Environmental Spillovers at the EEA/ESEM

Now back from 5 days in Milan at the EEA/ESEM 2008 conference where there were 5 or 6 environmental economics sessions most global warming related.

The average quality of paper presented was decent and there was a wide range of speakers including many European PhD students and over 1200 economists that I had never heard of (and I am sure had never heard of me).

In Search of Environmental Spillovers

Facundo Albornoz, Matthew A. Cole, Robert J.R. Elliott and Marco G. Ercolani

Abstract

There is an extensive literature that examines the relationship between foreign direct investment (FDI) and the productivity and competitiveness of domestic firms. Using estimation techniques from the productivity spillover literature, this paper tests for the presence of environmental spillovers from foreign firms. On the basis that foreign owned firms may encourage firms in their extended supply chain to improve their environment related management practices, evidence for the existence of environmental spillovers should be easier to find than productivity spillovers where firms naturally attempt to minimize intra-industry knowledge leakage. In this paper we show that first, foreign owned firms are more likely to implement environmental management systems (EMS) and second, that the presence of foreign owned firms in those sectors that a firm supplies can encourage good environmental practice. This is especially true if a firm is foreign, has high absorptive capacity, and operates in the presence of formal and informal networks.

JEL: D21, Q20, Q56.

Keywords: Multinationals, Environment, Firm Characteristics, Spillovers.

Normal blogging frequency can now resume and a month in Australia and 5 days in Milan.

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