Transcript Independent

FDI AND
DEFORESTATION
Duncan Hobbs
Ahmet Caskurlu
Nazar Mohammed
Introduction
How Green Was My Valley…
Foreign Direct Investment
• Pre-Industrial Revolution
• Industrial Revolution
• Post-Industrial Revolution
Independent and Dependent Variables
• Independent
• FDI inflows
• Dependent
• Net forest depletion
Hypothesis
FDI
INFLOWS
FOREST
DEPLETION
Background
• FDI conducive to economic growth
• Most common variables
• GDP/Cap, Population growth
• Different ways of deforestation measurement
• Opposition to FDI by environmentalists
• Fear of environmental regulations
• Kuznets curve-GDP per capita
Methodology
• Variable Selection
• DV: Net Forest Depletion
• IV: Foreign Direct Investment
• 1) in inflation-adjusted USD
• 2) as a percentage of GDP
• Control Variables
• Only Developing Countries
• Years from 1990-2012
Malaysia Case
• Malaysia -India- Liberia
FDI % GDP Models
Simple OLS
Multivariate OLS
Country FE
-3986879***
-4537810***
-0.0141
Annual GDP
Growth
9175934***
1175291.7*
GDP/Capita
(USD)
-3044147***
16179.2
Agricultural Land
(% of land area)
2875613***
-393695.3
net FDI inflows
%GDP
Observations
2987
1817
Adjusted R^2
0.0024
0.090
"* p<0.10
** p<0.05
*** p<0.01"
Source FDI&NFD all countries.dta
1817
0.102
FDI in USD Models
Simple OLS
Multivariate OLS
Country FE
0.00752***
0.00678
-0.0141
Annual GDP
Growth
7172881***
1175291.7*
GDP/Capita
(USD)
-3399960***
16179.2
Agricultural Land
(% of land area)
2721937***
-393695.3
net FDI inflows
USD
Observations
3014
1817
Adjusted R^2
0.017
0.094
"* p<0.10
** p<0.05
*** p<0.01"
Source FDI&NFD all countries.dta
1817
0.11
Limitations of study
• NFD observations coded as 0.
• Suspicious for some nations e.g. Brazil.
• Can’t necessarily fix with MI methods.
• Lack of good inequality data.
• FDI in USD not significant in Multi OLS model.
• Fixed effect models lack significance.
0 NFD?
Implications & Future Work
• Marginal effect of FDI is relatively small.
• About one penny of NFD per dollar of inflows.
• Need to focus on domestic problems.
Potential Future Research
• New satellite data to analyze deforestation.
• FDI inflows specific to forestry sector.
• Region-specific analysis.