Globalization and the Environment: Determinants of Firm Self-Regulation in China

Abstract

Critics assert that globalization is detrimental to the environment because it encourages location of polluting industries to countries with low environmental regulations. We suggest that globalization might also have positive environmental effects because global ties increase self-regulation pressures on firms in low-regulation countries. Using survey data from firms in China we find that multinational ownership, multinational customers, and exports to developed countries increase self-regulation of environmental performance.