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.