This thesis empirically tests propositions advanced in previous literature concerning the causes and effects of environmental regulation on trade and multinational investment flows. Examining the case of China, this thesis provides empirical support for those that argue that increasing levels of globalization, in the form of trade and foreign investment, do not necessarily have deleterious effects on the environment. Chapter one provides a brief overview of the relevant literature and makes the case for China as one of the most important test cases for these arguments in the developing world. Chapter two empirically examines the behavior of foreign multinational corporations (MNCs) in the face of regional disparities in environmental regulation. Rather than seeking out areas of diminished environmental protection to take advantage of reduced production costs, this chapter finds that, on average, multinational investment flows are more often directed toward provinces where environmental regulations are firmly in place and enforced. Chapter three addresses the broader argument as to the overall effects of liberalized trade and increased foreign direct investment (FDI) on regional environmental protection. This chapter finds that, on average, increases in global economic integration can actually be environmentally beneficial by providing a "transmission belt" of environmental regulatory standards and environmental technology from China's key export markets in the developed world. Chapter four concludes with some final thoughts and directions for future research.
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