What is the influence of FDI and international people flows on environment and growth in OECD countries? A panel study

Pascale, Gianluigi De; Sardaro, Ruggiero; Faccilongo, Nicola; Contò, Francesco

doi:10.1016/j.eiar.2020.106434

Cited by 32 publications

(7 citation statements)

References 43 publications

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“…Thus, for example, Pazienza [30] in a study for 30 countries of the Organization for Economic Cooperation and Development (OECD), showed the existence of negative relationships that characterize the technique (−0.0848), the scale (−0.0036), and the cumulative effects (−0.0044) of the FDI on CO 2 emissions. Likewise, [31] supported the hypothesis of the environmental Kuznets curve in the short term, while in the long term there are some variations in a similar sample of OECD countries. In a more recent version of the same study by Pazienza [32], the outcome revealed that the negative impact of the FDI on the emission of CO 2 , decreases as the scale of its inflow increases, leading to a reconsideration of the potential effects on the CO 2 emissions.…”

Section: Brief Literature Reviewsupporting

confidence: 68%

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 Reviewsupporting

confidence: 68%

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

2021

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“…With an FMOLS approach, [ 72 ] studied 22 members of OECD, during 1971–2000 and found support for the EKC hypothesis, a similar result was found by [ 73 , 74 ]), and besides the research described in [ 73 ] tested for causality. The results point to evidence of a two-dimensional relationship between emissions and GDP, investigating 78 countries, 26 OECD members with high income and 52 developing economies, applying an OLS panel estimation for the period of 1980–2010, but they do not support the EKC hypothesis for any of the countries in the sample [ 75 ], while [ 76 ] only supports the EKC for the short term, with a pooled OLS (POLS) and DOLS approach for 36 OECD countries during 2000–2017.…”

Section: Framework and Literature Reviewmentioning

confidence: 99%

Analysis of the New Kuznets Relationship: Considering Emissions of Carbon, Methanol, and Nitrous Oxide Greenhouse Gases—Evidence from EU Countries

Madaleno

Moutinho

2021

IJERPH

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Decreased greenhouse gas emissions (GHG) are urgently needed in view of global health threat represented by climate change. The goal of this paper is to test the validity of the Environmental Kuznets Curve (EKC) hypothesis, considering less common measures of environmental burden. For that, four different estimations are done, one considering total GHG emissions, and three more taking into account, individually, the three main GHG gases—carbon dioxide (CO2), nitrous oxide (N2O), and methane gas (CH4)—considering the oldest and most recent economies adhering to the EU27 (the EU 15 (Old Europe) and the EU 12 (New Europe)) separately. Using panel dynamic fixed effects (DFE), dynamic ordinary least squares (DOLS), and fully modified ordinary least squares (FMOLS) techniques, we validate the existence of a U-shaped relationship for all emission proxies considered, and groups of countries in the short-run. Some evidence of this effect also exists in the long-run. However, we were only able to validate the EKC hypothesis for the short-run in EU 12 under DOLS and the short and long-run using FMOLS. Confirmed is the fact that results are sensitive to models and measures adopted. Externalization of problems globally takes a longer period for national policies to correct, turning global measures harder and local environmental proxies more suitable to deeply explore the EKC hypothesis.

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“…On the one hand, globalisation is seen to enable countries to achieve environmental improvements [ 7 ], while on the other hand, as much of the literature recognises, globalisation is viewed as a driving force of economic growth [ 8 ] which could, consequently, be a driver of environmental degradation [ 7 , 9 ]. The same is noted for FDI, as it increases economic growth [ 10 , 11 ], but its negative effects on the environment are observed [ 12 , 13 ] as well. These negative effects of globalisation and FDI are external factors which have an adverse effect, negative externalities, on the environment.…”

Section: Introductionmentioning

confidence: 79%

Is the Relocation of Polluting Industries Prompted by FDI Flow and Stock, Globalisation, Corruption and Regulation?

Leal

Caetano

Marques

2021

IJERPH

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Can globalisation and foreign direct investment shape sustainable development? Foreign direct investment is one of the main drivers for the transfer of polluting industries. With this in mind, the main objective of this research is to identify the role played by foreign direct investment (flow and stock), globalisation (de jure and de facto), corruption and regulatory quality in environmental degradation and sustainable development. To accomplish this objective, and to link the relationships under analysis to the level of development, a comparison between a group of developing countries and a group of developed ones was performed. The results confirm the suitability of the division of the countries by revealing various effects. This analysis was conducted from 1996 to 2017 and by recurring to the Autoregressive Distributed Lag model. This study proves that foreign investors play a vital role in reaching sustainable development. Measures must be implemented to eliminate the distortions that cause a company based in a country with strict environmental regulations to relocate its production to one with lax environmental regulations. However, these measures need to be combined with complementary measures that encourage developing economies to agree to a possible slowdown in their economic growth if sufficiently compensated for this reduced growth.

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What is the influence of FDI and international people flows on environment and growth in OECD countries? A panel study

Cited by 32 publications

References 43 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

Analysis of the New Kuznets Relationship: Considering Emissions of Carbon, Methanol, and Nitrous Oxide Greenhouse Gases—Evidence from EU Countries

Is the Relocation of Polluting Industries Prompted by FDI Flow and Stock, Globalisation, Corruption and Regulation?

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