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Society and Natural Resources, 20:73–83
Copyright # 2007 Taylor & Francis Group, LLC
ISSN: 0894-1920 print=1521-0723 online
DOI: 10.1080/08941920600982866

Foreign Direct Investment and Pesticide Use

Intensity in Less-Developed Countries:
A Quantitative Investigation

ANDREW K. JORGENSON
Department of Sociology, Washington State University, Pullman,
Washington, USA

A growing area of empirical literature in sociology investigates the social and

environmental impacts of foreign direct investment. Building on macrosociological
theorization of foreign capital dependence and prior research, I test the hypothesis
that less-developed countries with higher levels of foreign capital penetration in
the primary sector use a greater amount of pesticides per hectare of arable and
permanent cropland. Findings for the ordinary least squares regression (OLS)
and robust regression analyses of 40 less-developed countries confirm the hypothesis,
and underscore the need for social scientists to assess the effects of foreign capital
penetration in different sectors.

Keywords agriculture, environmental degradation, foreign direct investment,

globalization, pesticides, political economy

A growing body of empirical literature in macrosociology addresses how structural

globalization (Chase-Dunn et al. 2000) in the forms of international trade and for-
eign investment impacts the environment and well-being of human populations
(e.g., Jorgenson and Kick 2003; 2006). For example, cross-national studies investi-
gate the effects of foreign capital penetration and the uneven flows of exports on
a variety of outcomes, including greenhouse gas emissions, the ecological footprints
of nations, water pollution, domestic income inequality, and infant mortality rates
(e.g., Burns et al. 2003; Chase-Dunn 1975; Grimes and Kentor 2003; Jorgenson
2003; Kentor 2001). One outcome absent in this literature that poses both human
and nonhuman consequences is pesticide use intensity. Developed countries use rela-
tively greater amounts of pesticides than less-developed countries (Dinham 1993;
World Resources Institute 2004). However, pesticide use intensity has increased dra-
matically in less-developed countries during the past few decades (Frey 1995), and
this increase corresponds with recent upswings in the globalization of foreign direct
investment and trade (Chase-Dunn and Jorgenson 2003).

Received 11 October 2005; accepted 12 January 2006.

The author thanks the anonymous reviewers for helpful comments and suggestions.
Address correspondence to Andrew K. Jorgenson, Department of Sociology, Washington
State University, PO Box 644020, Pullman, WA 99164-4020, USA. E-mail: jorgenson@
mail.wsu.edu

73
74 A. K. Jorgenson

This preliminary study analyzes the extent to which pesticide use intensity in
less-developed countries is a function of foreign investment in agriculture as well
as overall agricultural production and exports. Building on prior research and
macrosociological theorization, I test the following hypothesis: Less-developed
countries with higher levels of foreign capital penetration in the primary sector use
a greater amount of pesticides per hectare of arable and permanent cropland. Find-
ings for the cross-sectional ordinary least squares regression (OLS) and robust
regression analyses of 40 less-developed countries support the tested hypothesis
and underscore the need for researchers to assess the social and environmental
impacts of foreign direct investment in different sectors.

Foreign Capital Penetration and Environmental Degradation

Foreign capital penetration is the most widely studied form of international
dependence in macrocomparative research (e.g., Bornschier and Chase-Dunn
1985; Chase-Dunn 1975; Dixon and Boswell 1996). This form of dependence refers
to the extent to which transnational corporations dominate the economy of
host countries, which is often operationalized as the level of accumulated stocks
of foreign direct investment relative to the overall size of the host economy (e.g.,
Jenkins and Scanlan 2001; Jorgenson 2006; Kentor and Boswell 2003; London
and Robinson 1989). In countries with more agriculture-based economies, this often
involves a trend toward large-scale, export-oriented monocrop production (Fain
et al. 1997).
Previous studies suggest that foreign investment dependence is a structural
mechanism largely responsible for the rise of particular forms of environmental
degradation. For example, Grimes and Kentor (2003) found that less-developed
countries with higher levels of foreign capital penetration experienced increased total
carbon dioxide emissions in recent decades resulting from export-oriented manufac-
turing processes (see also Grant and Jones 2004; Roberts et al. 2003). This is com-
pounded as transnational corporations are less likely to invest in pollution
controls for production in less-developed countries, which tend to impose less strin-
gent environmental laws than do developed countries (Roberts et al. 2003). More-
over, less-developed countries to which forms of production are transferred
usually have relatively poor domestic infrastructures, which involve less energy-
efficient production processes, and generally, foreign capital is more likely to pur-
chase equipment required for more automated and energy-consumptive production
(Grimes and Kentor 2003). A limitation of these particular studies (e.g., Grimes and
Kentor 2003; Roberts et al. 2003) is the use of an overall measure of foreign direct
investment, rather than one that controls only for investment in manufacturing (the
secondary sector). Other social scientists argue for the necessity of evaluating the
effects of foreign capital penetration in particular sectors (e.g., Chase-Dunn 1998;
Bornschier and Chase-Dunn 1985).
Following the call for dissecting total foreign direct investment and investigating
the impacts of foreign capital penetration in different sectors, Jorgenson (2006)
analyzes the effects of foreign investment in manufacturing, agriculture, extractive
industries, and fuel refining on methane emissions intensity. Results indicate that
the impacts of foreign investment in manufacturing, fuel refining, and extractive
industries do indeed vary in magnitude, while the effect of foreign investment in agri-
culture is nonsignificant. Jorgenson’s (2006) study underscores the need for social
 Foreign Investment and Pesticide Use Intensity 75

scientists to assess the effects of foreign investment in different sectors on social and
environmental outcomes.
Drawing from prior research, sociological theorization of foreign investment
dependence, and the call for analyzing the effects of foreign direct investment in dif-
ferent sectors, I test the following hypothesis: Less-developed countries with higher
levels of foreign capital penetration in the primary sector use a greater amount of pes-
ticides per hectare of arable and permanent cropland. Many less-developed countries
have pursued agricultural policies that promote the adoption and implementation of
chemical-dependent agricultural technologies, which corresponds with the interests of
transnational corporations involved in agricultural ventures (e.g., Clapp 1998; 2003).
These policies often encourage the use of pesticides in export-oriented agricultural
production, and developing countries are less likely to have institutional environmen-
tal controls that regulate the use of pesticides deemed as environmentally and humanly
harmful (Frey 1995). As farming systems in less-developed countries are integrated
into the international economy, often through the influence and control of foreign
capital, crop rotation and recycling of organic matter are more likely to be replaced
by high-intensity use of pesticides and synthetic fertilizers (e.g., Altieri 2000).
More harmful pesticides are usually produced and sold by chemical corpora-
tions headquartered in developed countries (Frey 1995). Transnational corporations
with high levels of investment in agriculture within less-developed countries are prin-
cipal customers for pesticides, many of which are banned in developed countries but
provide a rather open and extensive market for their producers in locales without
environmental protection barriers (Frey 1995; Magdoff et al. 2000; Shiva and Bedi
2002). These banned pesticides have clear social and environmental consequences,
especially through their dispersion in local water tables (Sutton 1988) and soils
(Altieri 2000). For example, recent estimates indicate that approximately 90% of
all pesticides applied moves directly into local ecosystems to contaminate water
and soil (Frey 1995; Pimental and Levitan 1988). Exposure to pesticides and water
pollution has been found to cause cancer, sterility, birth defects, and an increase
in infant mortality rates in less-developed countries dependent on agricultural
exports (e.g., Jorgenson and Burns 2004; Williams 1986).
Consistent with most cross-national analyses of foreign investment, I include
measures of economic development and domestic investment in this preliminary
study. I also control for agricultural production, agricultural exports, state environ-
mentalism, and democratization. The former two controls allow for assessing the
extent to which pesticide use intensity is affected by the transnational organization
of production in the context of foreign investment relative to levels of production
and dependence on agricultural exports. Prior to the analyses, I briefly summarize
the theoretical arguments for including state environmentalism and democratization
as statistical controls that further reduce the likelihood of invalid inferences concern-
ing the tested hypothesis.

State Environmentalism and Democratization

Sociologists working in the ‘‘environmental state’’ and other approaches often
emphasize the potential for state environmentalism to lessen environmental degrada-
tion caused by practices in different production sectors, including agriculture.
Yet evidence of increasing policy formation or environmental treaty ratification
does not necessarily lead to greener state-sanctioned practices and improved
76 A. K. Jorgenson

environmental conditions (Buttel 2000; Roberts 1996). Similarly, an aspect of ecolo-

gical modernization theory holds that democratization encourages environmental
responsibility through increased demand for government activism on behalf of the
natural environment (e.g., Ehrhardt-Martinez et al. 2002). By providing greater
freedom of action and speech, democracies generally have increased environmental
activism because they provide a context in which individuals, nongovernmental
organizations, and new social movements can influence institutional behavior and
policy changes. Because of possible electoral competition, democracies are more
responsive to such actions and public opinion (Torras and Boyce 1998). Thus, demo-
cratization is expected to increase reforms that lead to more ecologically sound prac-
tices because it provides conditions in which concerned groups and organizations
can influence behavior and policy development.

Methods and Data

I employ ordinary least squares regression (OLS) and robust regression in the
reported analyses. OLS is the most common regression method used in macrocom-
parative sociology. Robust regression is a conservative approach that down-weights
the influence of outliers in residuals,1 and many social scientists suggest the use of
both OLS regression and robust regression when analyzing cross-national data
(e.g., Dietz et al. 1987; Sacks et al. 2001). Due to the unavailability of adequate panel
data for pesticide intensity, I use a cross-sectional design.2

Countries Included in the Analyses

Consistent with most cross-national studies of foreign direct investment, I focus the
analyses on less-developed countries. Less-developed countries are those not classi-
fied as high income by the World Bank’s (2000) income quartile classification.
The sample consists of 40 less-developed countries for which data are available on
all variables included in the analyses.3 Appendix A lists all countries included in
the study.

Dependent Variable
Pesticide intensity, 1995 (ln) refers to the amount of pesticide used per hectare
(kg=ha) of arable and permanent cropland. These data are gathered from the World
Resources Institute (2004). Total pesticide consumption in agriculture is divided by
the total area of arable and permanent cropland. Pesticide consumption is measured
in metric tons of active ingredients. Total pesticides consist of insecticides, mineral
oils, herbicides, fungicides and bactericides, seed treatments, plant growth regula-
tors, and rodenticides. To maximize the use of available data, I use measures
reported in the nearest year to 1995 (from 1993 to 1997) for countries that do not
report pesticide intensity for 1995. I log these data to correct for skewness.

Independent Variables
Gross domestic product per capita, 1990 (ln) controls for a country’s level of economic
development (World Bank 2000). These data are measured in 1995 U.S. dollars.
Consistent with other studies, I log these data to correct for skewness.
 Foreign Investment and Pesticide Use Intensity 77

Accumulated stocks of primary-sector foreign direct investment (FDI) as a pro-

portion of GDP, 1990 (ln) includes stocks of foreign direct investment in agriculture
as well as mining and quarrying.4 I obtain the foreign investment data from the
World Investment Directories (United Nations 1992–2003) and the International
Direct Investment Statistics Yearbook (OECD 2001). Total GDP data are measured
in 1995 U.S. dollars (World Bank 2000). I log these data to correct for skewness.
Agriculture as percentage of GDP, 1990 (residualized) controls for the extent to
which a country’s economy is agriculture-based (World Bank 2000). To minimize
collinearity, I regress these data on per capita GDP and use the unstandardized
residuals to control for the effects of agriculture as a percentage of GDP, indepen-
dent of level of development. This approach is common in cross-national research
(e.g., Jorgenson 2005; Jorgenson and Rice 2005).
Agricultural exports as a percentage of total exports, 1990 (ln) controls for the
extent to which a country’s exports are in agricultural products (World Resources
Institute 2004). I log these data to correct for skewness.
Gross domestic investment as a percentage of GDP, 1990 represents the level of
domestic investment in fixed assets plus net changes in inventory levels5 (World
Bank 2000).
State environmentalism (residualized) is a weighted indicator of relative state
environmental performance. These data are gathered from Dietz and Kalof
(1992). The index is a cumulative measure of ratification of international environ-
mental treaties, 1963–1987. Dietz and Kalof weight these data through a series of
principal component analyses of the original measure, which consists of a count
of identified treaties ratified by a given nation during the 24-year period. To mini-
mize collinearity, I regress these data on per capita gross domestic product (GDP)
and use the unstandardized residuals as measures of state environmentalism.
Index of democratization, 1980 (residualized) consists of two components: elec-
toral competition and popular participation. The first component is calculated by
subtracting the percentage of votes won by the largest party from 100. The second
component quantifies the percentage of the total adult population who voted in
the election concerned. Both components are weighted equally in the index, which
I obtain from Vanhanen (1997). I regress these data on per capita GDP and use
the unstandardized residuals as measures of democratization, independent of
economic development.
Table 1 presents bivariate correlations and descriptive statistics for all variables
included in the current study.

Results
Table 2 provides results for the multivariate OLS and robust regression analyses.
Using a stepwise approach, I test six models with Model 1 as a baseline, consisting
of per capita GDP and primary sector FDI. Model 6 is the most fully saturated, con-
sisting of all seven independent variables. Due to space limitations, I report only
Model 1 and Model 6 for the robust regression analyses. Findings indicate that for-
eign capital penetration in the primary sector positively affects pesticide use intensity
in less-developed countries. The positive effect is statistically significant and rela-
tively similar in magnitude across all OLS and robust regression models, providing
strong support for the tested hypothesis.
 Table 1. Correlations and descriptive statistics
Variable

No. Variable 1 2 3 4 5 6 7

1. Pesticide intensity (ln), 1995

2. GDP per capita (ln), 1990 .462
3. Primary-sector FDI=GDP (ln), 1990 .410
.274
4. Domestic investment as %GDP, 1990 .270 .300
.171
5. Agriculture=GDP, 1990 (residualized)
.039 .000 .013 .031
6. Agriculture as percent of total
.084
.467 .266 .069 .265
exports (ln), 1990
7. State environmentalism (residualized)
.194 .000
.226
.038 .009 .008

78
8. Democratization, 1980 (residualized)
.091 .000 .129
.160 .240 .206 .200
Variable Mean SD Skewness Kurtosis Minimum Maximum

Pesticide intensity (ln), 1995 .796 .539 .937 .837 .100 2.430
GDP per capita (ln), 1990 8.005 .811
.274
.872 6.320 9.380
Primary-sector FDI=GDP (ln), 1990 .026 .036 1.573 1.415 .000 .130
Domestic investment as %GDP, 1990 21.652 6.681 .540 .527 10.220 41.350
Agriculture=GDP, 1990 (residualized) .000 6.129 .429 .056
11.971 15.763
Agriculture as percent of total 1.744 .553
.656 .761 .340 2.730
exports (ln), 1990
State environmentalism (residualized) .000 .755 .141
.830
1.547 1.267
Democratization, 1980 (residualized) .000 9.296 .125
.846
18.364 16.686
 Table 2. OLS and robust regression analyses (dependent variable: pesticide intensity, 1995; n ¼ 40 LDCs)
OLS OLS OLS OLS OLS OLS Robust Robust
Variable Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 1 Model 6

GDP per capita (ln), 1990 .621


.565


.574


.573


.610


.684



[.413] [.376] [.382] [.381] [.406] [.455] [.408


] [.467


]
(.078) (.079) (.082) (.093) (.098) (.104) (.085) (.108)
1.081 1.164 1.207 1.516 1.675 1.941

Primary-sector .581


.600


.601


.602


.632


.625

FDI=GDP (ln), 1990 [8.482] [8.768] [8.785] [8.790] [9.230] [9.128] [8.217


] [8.788


]
(1.721) (1.683) (1.704) (1.766) (1.856) (1.841) (1.862) (1.911)
1.081 1.091 1.092 1.139 1.246 1.249

Domestic investment as .203 .200 .200 .197 .201

79
%GDP, 1990 [.016] [.016] [.016] [.016] [.016] [.018]
(.009) (.010) (.010) (.010) (.010) (.010)
1.109 1.117 1.196 1.197 1.198

Agriculture=GDP, .043 .044 .047 .016

1990 (residualized) [.004] [.004] [.004] [.001] [.003]
(.010) (.010) (.010) (.011) (.011)
1.038 1.085 1.086 1.131

Agriculture as percent total .002 .006 .016

exports (ln), 1990 [.002] [.006] [.015] [.011]
(.134) (.135) (.134) (.139)
1.479 1.487 1.491

(Continued)
 Table 2. Continued

OLS OLS OLS OLS OLS OLS Robust Robust

Variable Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 1 Model 6

State environmentalism (residualized) .100 .082

[.071] [.059] [.114]
(.088) (.088) (.091)
1.181 1.196

Democratization, 1980 .168

80
(residualized) [.010] [.009]
(.008) (.008)
1.377

Constant 2.734 2.800 2.839 2.833 3.042 3.437 2.698 3.584

(.644) (.628) (.644) (.825) (.869) (.915) (.697) (.950)
R2 .525 .562 .564 .564 .573 .593
Adjusted R2 .499 .526 .514 .500 .495 .504
Notes: Standardized coefficients are flagged for statistical significance in OLS analyses; all unstandardized coefficients appear in brackets; unstandar-
dized coefficients in robust regression analyses are flagged for statistical significance; all standard errors are in parentheses; VIFs appear in italics.




p < .001;

p < .01;
p < .05 (two-tailed tests).
 Foreign Investment and Pesticide Use Intensity 81

Turning to the other predictors, per capita GDP positively affects pesticide
intensity, and the effects of all remaining independent variables are nonsignificant.
The positive effect of per capita GDP is consistent with prior studies of pesticide
flows and use (e.g., Dinham 1993; Frey 1995; World Resources Institute 2004).
Variance inflation factors (VIF) stay well below 2.0 in all OLS models (with the
exception of per capita GDP in Model 6 [VIF ¼ 1.941]), indicating that the analyses
are not affected by high collinearity. The adjusted coefficients of determination show
that approximately 50% of variation in less-developed countries’ pesticide use inten-
sity is accounted for by primary sector foreign capital penetration and level of
economic development.6

Conclusion
Pesticide use intensity in less-developed countries has increased substantially during
recent decades. This increase corresponds with the latest upswing of foreign invest-
ment globalization and the intensification of global production of all forms, includ-
ing large-scale monoagriculture. The goal of this preliminary study was to test the
hypothesis that less-developed countries with higher levels of foreign capital penetra-
tion in the primary sector use a greater amount of pesticides. Results of the cross-
sectional analyses confirm the hypothesis, which also supports the longstanding
macrosociological theorization of international structural dependence. Coupled with
Jorgenson’s (2006) recent study of methane emissions intensity, the current analyses
highlight the need for social scientists to investigate the social and environmental
impacts of foreign capital penetration in different sectors. These more nuanced ana-
lyses would increase our collective understanding of the transnational organization
of production, and likely lead to less abstract international policy prescriptions.

Appendix A: Less-Developed Countries Included in the Analyses (N ¼ 40)

Algeria Ghana Poland

Argentina Greece Portugal
Bangladesh Guatemala Rwanda
Bolivia Honduras Senegal
Brazil Hungary South Africa
Bulgaria India Sri Lanka
Cameroon Iran Tanzania
Chile Ireland Thailand
Colombia Jordan Turkey
Costa Rica Kenya Venezuela
Czech Republic Malaysia Vietnam
Dominican Republic Nicaragua Zimbabwe
Ecuador Pakistan
Egypt Panama

Notes
1. I employ a robust regression procedure that uses iteratively reweighted least squares with
Huber and biweight functions tuned for 95% Gaussian efficiency (Hamilton 2006).
2. I acknowledge this temporal limitation of the present study.
82 A. K. Jorgenson

3. Using Cook’s distance in the OLS analyses, I determine that the sample included in the
reported study does not include overly influential cases. I also note that the reported
OLS analyses do not include cases with standardized residuals greater than 3 (absolute
value).
4. Ideally, I would prefer measures of foreign investment only in agriculture. Those data are
unavailable for an adequate number of countries. However, the use of primary-sector data
is a much more nuanced approach than the (more common) use of total foreign investment
data to investigate the relationship between foreign capital dependence and particular out-
comes, such as pesticide use intensity.
5. Measures of domestic investment in only the primary sector are currently unavailable on a
cross-national basis.
6. Since robust regression down-weights the influence of cases based on the size of their error
terms, precisely the information used to calculate the R2 statistic, the R2 cannot be calcu-
lated for the robust regression models. Also, standardized regression coefficients are not
calculated when using STATA to conduct robust regression analyses (Hamilton 2006).

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