Foreign direct investment impact on environment in Serbia in the period 2000-2008

Abstract

Foreign direct investment (FDI) is currently the largest source of capital reaching developing countries and a stimulant to economic growth. Although FDI benefits the economy of the “host” country, its impact on the environment can vary from pure exploitation of slack environmental regulations and the creation of “pollution havens”, environmental political “chilling” effect, to the transfer of new clean technologies and the formation of “pollution haloes”. This paper focuses on FDI environmental impact in Serbia, in the period from the opening of the borders to foreign capital in 2000 until 2008, when the FDI in Serbia drastically decreased. The FDI growth of 65 times in the period of five years emphasizes the relevance of this analysis, if sustainable development is to be achieved. This paper envisages FDI impact and visible actual tendencies on Serbian environment, and defines to which of the theoretical concepts it could be arranged. The paper explores whether FDI influence in Serbia resulted in a dominant transfer of pollution intensive industries or a transfer of environmentally friendly technology and know-how, in reducing or improving environmental regulations in Serbia.