Can Japan's Outwards FDI Reduce its CO<sub>2</sub> Emissions?: A New Thought on Polluter Haven Hypothesis

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This study tests for the Granger causal relationship between Japan's CO2 emissions, outwards FDI and economic development. The results show that Japan's outwards FDI is the Granger cause of Japan's CO2 emissions and the effect is negative, which means when Japan increase outwards FDI, Japan's environmental state will get better. So, Polluter haven hypothesis is true for Japan and developing countries should enhance their environmental standards to stop absorbing Japan's pollution intensive FDI.