Foreign Investment Dependence and the Environment: An Ecostructural Approach

Abstract

Sociologists have long debated the impacts of foreign investment for less developed countries. However, theorization fails to articulate the potential environmental consequences of foreign investment dependence. Here, an ecostructural theory of investment dependence is proposed and a derived hypothesis is tested. The hypothesis states that less developed countries dependent on foreign investment in manufacturing exhibit higher levels of per capita noxious gas emissions. These anthropogenic emissions contribute to global warming, climate change, and a variety of human health problems. To test the hypothesis, newly available panel data for the emission of nitrogen oxides, volatile organic compounds, carbon monoxide, and carbon dioxide gas as well as measures of foreign investment in manufacturing are analyzed in random effects generalized least squares (GLS) panel regression models for 39 less developed countries. Findings confirm the hypothesis, even when controlling for domestic investment, the relative size of the manufacturing sector, level of development, and other factors. Overall, the analyses support the ecostructural theory of foreign investment dependence, and underscore the sociological relevance in considering the environmental impacts of the transnational organization of production as well as the overall scale of production.