This paper is an attempt to analyze the relationship between liberalization and Greenhouse Gases emissions in Central and East European Countries. After their accession to the EU, most of the CEECs have already committed to reducing their GHGs emissions. Although emissions have decreased on average, there is a substantial heterogeneity among the countries in terms of both the direction and the magnitude of the changes. Moreover, within the liberalization and integration efforts, increasingly huge amount of Foreign Direct Investment has flown to the region, rendering it almost a magnet of inward FDI over the past two decades. Therefore the question is whether or not this increase in foreign investment to CEECs is related to the polluting industries. The coincidence of increased FDI and GHGs emission has led us to study the relationship between them.
We exploited cross-sectional and time series variation of the data.
We found that the polluting FDI is positively associated with GHGs emissions in CEECs.
Few previous studies have taken into account FDI and environmental performance together, so our analysis represents a notable contribution to the pollution haven literature.
