International Direct Investment and Transboundary Pollution: An Empirical Analysis of Complex Networks

Using complex networks and spatial econometric methods, we empirically test the extent to which a country’s influence and its position in an international investment network affect environmental quality as well as the country’s role in transboundary pollution transfer. The estimated results show that the ties connecting nodes together in an international investment network have significant impacts on global environmental pollution. Additionally, node linkages between developing countries have stronger negative effects on environmental quality than node linkages between developed countries. Moreover, greater node importance and node centrality accelerate the speed and scale of the growth of polluting industries, which allows developed countries to more easily transfer their pollution-intensive industries to developing countries that possess higher node dependency. We also find that the factor endowment effect coexists with the pollution haven effect, the effects of environmental regulation advantage in the international investment network are greater than the impact of factor endowment advantage.