Does FDI affect environmental degradation? Examining pollution haven and pollution halo hypotheses using ARDL modelling

Kisswani, Khalid M.; Zaitouni, Michel

doi:10.1080/13547860.2021.1949086

Cited by 72 publications

(33 citation statements)

References 65 publications

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“…That confirms the hypothesis of the FDI Halo, contrary to the effect of economic growth, which deteriorates environmental quality. Similar investigations that have found evidence coming from FDI inputs on CO 2 emissions or another environmental measure have been conducted by [42][43][44][45][46][47][48][49][50].…”

Section: Brief Literature Reviewmentioning

confidence: 77%

Foreign Direct Investment and Environmental Quality: Revisiting the EKC in Latin American Countries

2021

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In this study we aim to test the effects of foreign direct investment (FDI) on carbon emissions (CO2) in 20 Latin American countries during the period of 1990–2018. Based on the atlas method of the World Bank, we divided the countries into three groups according to their real gross national income per capita: high-income, upper-middle-income and lower-middle-income countries. We used cointegration techniques and causality tests to evaluate the relationship between the variables. To assess the strength of the cointegration vector, we applied the dynamic ordinary least squares (DOLSs) model for individual countries and the dynamic panel ordinary least squares (PDOLSs) model for groups of countries. The results suggest that the entry of FDI into Latin American (LA) countries increases CO2 emissions, affecting the environmental quality. These findings disagree with the environmental Kuznets curve (EKC) hypothesis but, in contrast, they are in line with the pollution haven hypothesis (PHH). Moreover, we show evidence in long-term equilibrium relationship between FDI input and CO2 emissions, which is not the case for the short-term equilibrium. Some additional results suggest that FDI flows do not cause the CO2 emissions in LA countries. The empirical findings suggest policymakers to design policies to “the second-best theory”, targeting FDI flows to their economies to solve economic problems in the short term, but thereafter they may guarantee the reduction in environmental pollution, based on environmentally responsible FDI and stronger regulations. In other words, the transition from a pollution haven to the applicability of the environmental Kuznets curve (EKC). This study contributes with scarce empirical evidence for LA countries in this issue.

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Section: Brief Literature Reviewmentioning

confidence: 77%

Foreign Direct Investment and Environmental Quality: Revisiting the EKC in Latin American Countries

2021

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“…Other empirical works (for example Huynh & Hoang, 2019;Halliru et al, 2020;Yilanci et al, 2020;Kisswani & Zaitouni, 2021) revealed contradictory results. In other words, given the varying effects of FDI on environmental pollution, they either accept or reject the PHH.…”

Section: Literature Reviewmentioning

confidence: 92%

FDI and Environmental Sustainability Nexus: Testing the Pollution Haven Hypothesis in the Presence of Regulatory Quality

2022

IJAREF

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In this study, we examine the relationship between foreign direct investment (FDI) and environmental pollution within the context of the pollution haven hypothesis (PHH) in Ghana. We also investigate the role of regulatory quality in the FDI-pollution linkage. The study employs quarterly data spanning the period 2000Q1-2017Q4 and applies the fully modified least squares (FMOLS) technique. The empirical results show that FDI inflows significantly and positively drive environmental pollution. This result holds in the presence of regulatory quality. Accordingly, we confirm the validity of the pollution haven hypothesis in Ghana. The study also finds that industrialization increases pollution given its significant positive relationship with ecological footprint. We discuss relevant policy implications.

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“…This view is mostly based on pollution halo hypothesis which contends that FDI helps developing countries to find the opportunity to improve cleaner technologies with investments on highlevel research and development (Jalil and Feridun, 2011;Kocak and Sarkgunesi, 2018;Huynh and Hoang, 2019). The literature on pollution halo hypothesis is also contentious and presents a diverse nature (Balsalobre-Lorente et al, 2019;Mert and Caglar, 2020;Duan and Jiang, 2021;Kisswani and Zaitouni, 2021;Xu et al, 2021;Shinwari et al, 2022). According to He (2008), the relationship between FDI inflows and environmental pollution is significantly more complicated than a simple one-way relationship.…”

Section: Literature Reviewmentioning

confidence: 99%

Club Convergence: Do public investments play a role in regional income per capita convergence in Turkey?

Coşkun

DEMİR

2022

eab

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This paper investigates club convergence in real GDP per capita in NUTS 2 level at Turkey from 2005 to 2019 by using Phillips and Sul (2009, 2007) procedure. After determining the initial clubs, to seek merging clubs we perform Phillips and Sul (2009) and Lyncker and Thoennessen (2017) procedure. As a result, we find 7 convergence clubs and one divergent club following Phillips and Sul (2009, 2007) and we don’t find any merging clubs following Phillips and Sul (2009) and Lyncker and Thoennessen (2017) procedure. After determining the convergence and merging clubs, this paper also scrutinizes the dynamic effects of public capital on regional convergence employing system generalized method-of-moments (System GMM) estimators. It has been concluded that from System GMM results, share of public investments in GDP do not have a significant role as a determinant of any clubs.

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Does FDI affect environmental degradation? Examining pollution haven and pollution halo hypotheses using ARDL modelling

Cited by 72 publications

References 65 publications

Foreign Direct Investment and Environmental Quality: Revisiting the EKC in Latin American Countries

Foreign Direct Investment and Environmental Quality: Revisiting the EKC in Latin American Countries

FDI and Environmental Sustainability Nexus: Testing the Pollution Haven Hypothesis in the Presence of Regulatory Quality

Club Convergence: Do public investments play a role in regional income per capita convergence in Turkey?

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