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.

Recent national trends in Salvia divinorum use and substance-use disorders among recent and former Salvia divinorum users compared with nonusers.

CONTEXT: Media and scientific reports have indicated an increase in recreational use of Salvia divinorum. Epidemiological data are lacking on the trends, prevalence, and correlates of S. divinorum use in large representative samples, as well as the extent of substance use and mental health problems among S. divinorum users. OBJECTIVE: To examine the national trend in prevalence of S. divinorum use and to identify sociodemographic, behavioral, mental health, and substance-use profiles of recent (past-year) and former users of S. divinorum. DESIGN: Analyses of public-use data files from the 2006-2008 United States National Surveys on Drug Use and Health (N = 166,453). SETTING: Noninstitutionalized individuals aged 12 years or older were interviewed in their places of residence. MAIN MEASURES: Substance use, S. divinorum, self-reported substance use disorders, criminality, depression, and mental health treatment were assessed by standardized survey questions administered by the audio computer-assisted self-interviewing method. RESULTS: Among survey respondents, lifetime prevalence of S. divinorum use had increased from 0.7% in 2006 to 1.3% in 2008 (an 83% increase). S. divinorum use was associated with ages 18-25 years, male gender, white or multiple race, residence of large metropolitan areas, arrests for criminal activities, and depression. S. divinorum use was particularly common among recent drug users, including users of lysergic acid diethylamide (53.7%), ecstasy (30.1%), heroin (24.2%), phencyclidine (22.4%), and cocaine (17.5%). Adjusted multinomial logistic analyses indicated polydrug use as the strongest determinant for recent and former S. divinorum use. An estimated 43.0% of past-year S. divinorum users and 28.9% of former S. divinorum users had an illicit or nonmedical drug-use disorder compared with 2.5% of nonusers. Adjusted logistic regression analyses showed that recent and former S. divinorum users had greater odds of having past-year depression and a substance-use disorder (alcohol or drugs) than past-year alcohol or drug users who did not use S. divinorum. CONCLUSION: S. divinorum use is prevalent among recent or active drug users who have used other hallucinogens or stimulants. The high prevalence of substance use disorders among recent S. divinorum users emphasizes the need to study health risks of drug interactions.