TY  - JOUR
AU  - Keller,Wolfgang
AU  - Levinson,Arik
TI  - Environmental Compliance Costs and Foreign Direct Investment Inflows to U.S. States
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7369
PY  - 1999
Y2  - September 1999
UR  - http://www.nber.org/papers/w7369
L1  - http://www.nber.org/papers/w7369.pdf
N1  - Author contact info:
Wolfgang Keller
Department of Economics
University of Colorado-Boulder
Boulder, CO 80309-0256
Tel: 303/735 5507
Fax: 303/492 8960
E-Mail: Wolfgang.Keller@colorado.edu

Arik Levinson
Department of Economics ICC 571
Georgetown University
3700 O St., NW
Washington, DC 20057
Tel: 202/687-5571
Fax: 202/687-6102
E-Mail: aml6@georgetown.edu
AB  - This paper estimates the extent to which changing environmental standards have altered patterns of international investment. Our analysis goes beyond the existing literature in three ways. First, we avoid comparing regulations in different countries by using data on inward foreign direct investment (FDI) to the U.S. and on differences in the regulatory stringency of U.S. states. This approach has the advantage that data on environmental stringency in U.S. states are more comparable than that for different countries, and that U.S. states are more similar than countries in other difficult-to-measure dimensions. Second, our measure of environmental stringency accounts for differences in states' industrial compositions for earlier studies. Third, we employ a panel of annual measures of relative regulatory stringency from 1977 to 1994, allowing us to control for unobserved state characteristics that may be correlated with both FDI and compliance costs. We find some evidence of small deterrent effects of environmental regulations in particularly pollution-intensive industries large or widespread effects. While the broad conclusions are consistent with the existing literature, this paper does address three important concerns with that literature.
ER  -