Impact of FDI and trade on environmental quality in the CAFTA-DR region

Frutos-Bencze, Dina; Bukkavesa, Kanix; Kulvanich, Nat

doi:10.1080/13504851.2017.1282112

Cited by 24 publications

(11 citation statements)

References 13 publications

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“…the results of the study showed the positive effect of trade openness on carbon emissions. Frutos-Bencze, Bukkavesa [14] investigated the influence of foreign direct investment and trade openness on environmental quality. the study used CO 2 , NO X , and SO 2 as proxies of environmental quality.…”

Section: Trade Openness and Environmental Sustainabilitymentioning

confidence: 99%

“…Therefore, a closer look at the literature reveals several gaps and shortcomings, which the present study wishes to address: First, the literature shows contradictory findings on the relationship between trade openness and environmental degradation. For instance, some studies like Khobai and Le Roux [12] and Zamil, Furqan, & Mahmood, [13] found a positive relationship while others found a negative relationship [14,15]. Second, the findings of the previous studies on the relationship between financial development and environmental degradation also provide mix results i.e., some studies suggest the positive relationship [16], others suggest the negative relationship [17], while some evidence reveals the presence of non-linearity/asymmetric relationship [10].…”

Section: Introductionmentioning

confidence: 99%

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Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach

Ahmed

Kousar²,

Pervaiz

et al. 2020

Sustainability

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The aim of this study is threefold; first, the study investigates the symmetric impact of trade openness, financial development, and institutional quality on environmental degradation and environmental sustainability. Second, the study examines the asymmetric relationship between financial development, institutional quality, and environmental degradation. Third, the study examines the asymmetric relationship between financial development, institutional quality, and environmental sustainability. For this purpose, the study utilized the data of Pakistan from 1996 to 2018. The study applied Augmented Dickey–Fuller (ADF), Phillips Parron (PP) and Zivote, and Andrews unit root test to check the properties of stationarity of the data. This study applied the Auto Regressive Distributive Lags (ARDL) model to investigate symmetric relationships while the Non-Linear Auto Regressive Distributive Lag Model (NARDL) approach is utilized to investigate the asymmetric relationship among variables. ARDL bounds testing approach utilized to investigate long-run co-integration while short-run dynamics have been investigated by applying the error correction method (ECM). This study found the significant long-run symmetric and asymmetric association of institutional quality (IQ) and financial development (FD) with environmental degradation (ED) and environmental sustainability. However, IQ- has an insignificant association with environmental sustainability. Moreover, dynamic multiplier analysis indicates that positive shock to FD and IQ has a stronger impact on environmental degradation while a positive or negative shock to FD; both have a stronger impact on environmental sustainability. However, a positive or negative shock to IQ has a smaller impact on environmental sustainability. Moreover, the study also found a significant long-run symmetric association of trade openness with environmental degradation and environmental sustainability. This study suggests that the quality of institutions, financial development, and trade openness is necessary to enhance the quality of the environment.

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Section: Trade Openness and Environmental Sustainabilitymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach

Ahmed

Kousar²,

Pervaiz

et al. 2020

Sustainability

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“…With the increase of trade openness in Burkina Faso, Gambia, and Nigeria, the emission reduction effect of FDI is also more obvious, and with the reduction of foreign trade in Ghana, Mali, and Togo, the emission reduction effect of FDI also declines; however, in Benin, Niger, Senegal, and Sierra Leone, the long-term impact of FDI on CO 2 emissions is not significant. Frutos-Bencze et al [31] investigated the relationship between FDI, trade and industrial emissions from the Central American Free Trade Agreement (CAFTA-DR) from 1979 to 2010. Studies have shown that FDI and trade have a negative impact on selected pollutant emissions, including carbon dioxide, that is, increased emissions.…”

Section: Literature Reviewmentioning

confidence: 99%

Bootstrap ARDL Test on the Relationship among Trade, FDI, and CO2 Emissions: Based on the Experience of BRICS Countries

Chang

et al. 2020

Sustainability

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We used the Bootstrap Autoregressive Distributed Lagged Model (ARDL) method to test the relationship among BRICS (Brazil, Russia, India, China, and South Africa) countries’ trade, foreign direct investment (FDI), and CO2 emissions. We found that Brazil’s CO2 emissions and FDI have a cointegration relationship with the trade on the lag of one-period. Russia and India and CO2 emissions and trade have a cointegration relationship with FDI on the lag of one-period. In the long-term, Brazil’s FDI has a long-term causal relationship with the trade on the lag of one-period. The trade between Russia and India has a long-term causal relationship with FDI on the lag of one-period. Among other BRICS variables, Russian trade and FDI on the lag of one-period of CO2 emissions and FDI and CO2 emissions are on the lag of one-period on trade, which McNown et al. mentioned is the degeneration case #1 in their paper; while China’s trade and FDI on the lag of one-period of CO2 emissions is the country of degeneration case #2. When we examined short-term causality, we found that CO2 emissions showed a causal relationship with trade, while FDI and CO2 emissions were less pronounced. Trade has a positive causal relationship with FDI. These variables are different in different situations and in different countries. These results should be related to BRICS countries’ FDI, international trade development, and their different CO2 emission policies.

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“…With the increase of trade openness in Burkina Faso, Gambia and Nigeria, the emission reduction of FDI The effect is also more obvious; and with the reduction of foreign trade in Ghana, Mali and Togo, the emission reduction effect of FDI also declines; In Benin, Niger, Senegal, and Sierra Leone, the long-term impact of FDI on carbon emissions is not significant. Frutos-Bencze et al [26] investigated the relationship between FDI, trade and industrial emissions from the Central American Free Trade Agreement (CAFTA-DR) from 1979 to 2010. Studies have shown that FDI and trade have a negative impact on selected pollutant emissions, including carbon dioxide, that is, increased emissions.…”

Section: Literature Reviewmentioning

confidence: 99%

Bootstrap ARDL Test on the Relationship among Trade, FDI and CO<sub>2</sub> Emissions: Based on the Experience of BRICS Countries

He¹,

Chang²,

Li³

et al. 2019

Preprint

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We used the Bootstrap ARDL method to test the relationship between the export trades, FDI and CO2 emissions of the BRICS countries. We found that China's foreign direct investment and the lag one period of CO2 emissions have a cointegration on exports. South Africa's foreign direct investment and CO2 emissions have a cointegration relationship with the lag one period of exports, and South Africa's the lag one period of exports and foreign direct investment have a cointegration relationship with the lag one period of CO2 emissions. But whether it is China or South Africa, these three variables have no causal relationship in the long-term. Among the variables of other BRICS countries, Russia is the only country showed degenerate case #1 in McNown et al. mentioned in their paper. When we examined short-term causality, we found that CO2 emissions and export trade showed a reverse causal relationship, while FDI and carbon emissions were not so obvious. Export trade has a positive causal relationship with FDI. Those variables are different from different situations and different countries.

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Impact of FDI and trade on environmental quality in the CAFTA-DR region

Cited by 24 publications

References 13 publications

Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach

Financial Development, Institutional Quality, and Environmental Degradation Nexus: New Evidence from Asymmetric ARDL Co-Integration Approach

Bootstrap ARDL Test on the Relationship among Trade, FDI, and CO2 Emissions: Based on the Experience of BRICS Countries

Bootstrap ARDL Test on the Relationship among Trade, FDI and CO<sub>2</sub> Emissions: Based on the Experience of BRICS Countries

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