Foreign Direct Investment, Ecological Withdrawals, and Natural-Resource-Dependent Economies

Abstract

ABSTRACTThis article examines the relationships between foreign direct investment (FDI) and natural resource depletion and natural resource rents for a longitudinal (2005–2013: N = 125 nations) sample of less developed countries (LDCs). Theoretically, we argue that FDI contributes to increased ecological withdrawals and dependence on the natural resource sector for economic growth within countries. We hypothesized that LDCs with higher levels of FDI would also have higher levels of natural resource depletion and income (i.e., rents). We assess whether this hypothesized relationship holds across nations in our sample for four different natural resource depletion and rents measures (energy, forest, mineral, and total natural resources). We find strong support for our hypotheses regarding natural resource depletion and resource rents, with the exception of energy rents. The outcome lends support to the ecological withdrawal and ecostructural theory of foreign investment dependence perspectives.