Interesting paper out of the Berkeley Global Economy Journal
Trade Agreements and the Environment: An Industry Level Study for NAFTA
Raymond MacDermott. Global Economy Journal Volume 6, Issue 3 2006 Article 3
We find strong evidence of both the pollution-haven hypothesis and the positive impact of the NAFTA on FDI. In addition, we find the trade agreement exacerbates the pollution-haven effect. That is, the incentive to invest in countries with weak environmental regulations is greater under a trade agreement such as the NAFTA. Surprisingly, stronger evidence of this effect is found in lower polluting industries than in higher polluting industries.