Agglomeration effects in foreign direct investment and the pollution haven hypothesis

Does environmental regulation impair international competitiveness of pollution-intensive industries to the extent that they relocate to countries with less stringent regulation, turning those countries into "pollution havens"? We test this hypothesis using panel data on outward foreign direct investment (FDI) flows of various industries in the German manufacturing sector and account for several econometric issues that have been ignored in previous studies. Most importantly, we demonstrate that externalities associated with FDI agglomeration can bias estimates away from finding a pollution haven effect if omitted from the analysis. We include the stock of inward FDI as a proxy for agglomeration and employ a GMM estimator to control for endogenous time-varying determinants of FDI flows. Furthermore, we propose a difference estimator based on the least polluting industry to break the possible correlation between environmental regulatory stringency and unobservable attributes of FDI recipients in the cross-section. When accounting for these issues we find robust evidence of a pollution haven effect for the chemical industry. © 2008 Springer Science+Business Media B.V.

Encouraging clean energy investment in developing countries: what role for aid?

A large portion of foreign assistance for climate change mitigation in developing countries is directed to clean energy facilities. To support international mitigation goals, however, donors must make investments that have effects beyond individual facilities. They must reduce barriers to private-sector investment by generating information for developers, improving relevant infrastructure, or changing policies. We examine whether donor agencies target financing for commercial-scale wind and solar facilities to countries where private investment in clean energy is limited and whether donor investments lead to more private investments. On average, we find no positive evidence for these patterns of targeting and impact. Coupled with model results that show feed-in tariffs increase private investment, we argue that donor agencies should reallocate resources to improve policies that promote private investment in developing countries, rather than finance individual clean energy facilities.

All my children: The roles of semantic category and phonetic similarity in the misnaming of familiar individuals.

Despite knowing a familiar individual (such as a daughter) well, anecdotal evidence suggests that naming errors can occur among very familiar individuals. Here, we investigate the conditions surrounding these types of errors, or misnamings, in which a person (the misnamer) incorrectly calls a familiar individual (the misnamed) by someone else's name (the named). Across 5 studies including over 1,700 participants, we investigated the prevalence of the phenomenon of misnaming, identified factors underlying why it may occur, and tested potential mechanisms. We included undergraduates and MTurk workers and asked questions of both the misnamed and the misnamer. We find that familiar individuals are often misnamed with the name of another member of the same semantic category; family members are misnamed with another family member's name and friends are misnamed with another friend's name. Phonetic similarity between names also leads to misnamings; however, the size of this effect was smaller than that of the semantic category effect. Overall, the misnaming of familiar individuals is driven by the relationship between the misnamer, misnamed, and named; phonetic similarity between the incorrect name used by the misnamer and the correct name also plays a role in misnaming.