What is the Environmental Performance of Firms Overseas?: An Empirical Investigation of the Global Gold Mining Industry

Using a large plant level data set, this paper carries out an econometric analysis of the environmental performance of multinational …rms in the gold mining industry worldwide. The aim of the analysis is to determine if, by looking at the actual environmental performance of …rms (as opposed to inferring such behavior from location decisions), we can shed any light on important questions in the literature on …rm location decisions: Do pollution havens exist in the gold mining industry? Do foreign controlled gold mines perform environmentally worse or better than their domestic counterparts? We develop di¤erent ways of measuring environmental performance within the context of a Bayesian stochastic production frontier approach. In particular, we derive di¤erent ways of measuring technical and environmental e¢ ciency. When we implement these methods in our empirical work, we …nd that results are robust across di¤erent models and ways of measuring e¢ ciency. We …nd that gold mines exhibit a wide range of environmental e¢ ciencies; some are clearly more e¢ cient than others, in other words. However, and most importantly for our questions, we …nd that this variation in e¢ ciencies cannot be systematically related to mine characteristics such as whether they are foreign or domestically controlled or whether they are located in developed or developing countries. Keywords: Bayesian stochastic frontier analysis; e¢ ciency; environmental regulations and plant performance; pollution havens; regulatory chill; gold mining. JEL Classi…cation: Q3, Q56, C11, C23.