The Transnational Organization of Production and Environmental Degradation: A Cross‐National Study of the Effects of Foreign Capital Penetration on Water Pollution Intensity, 1980–1995*

Abstract

Objective. This study attempts to increase our understanding of the environmental impacts of the transnational organization of production in the context of foreign capital penetration. Methods. With a sample of 53 countries, panel analyses using OLS and robust regression are conducted to assess the effects of foreign direct investment in the manufacturing sector on growth in organic water pollution intensity, 1980–1995. Slope‐dummy interaction variables are used to compare the effects in developed countries and less‐developed countries. The tested models include a variety of relevant controls, such as domestic investment, state environmentalism, size of the manufacturing sector, and level of economic development. Results. Findings for the analyses indicate that foreign direct investment in manufacturing positively affects growth in organic water pollution intensity in less‐developed countries, while the effect in developed countries is nonsignificant. Conclusions. This research illustrates the need for social scientists to investigate the environmental impacts of both the transnational organization of production and the overall scale of production in different sectors.

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