Improving the environment begins at home: Revisiting the links between FDI and environment

Adeel-Farooq, Rana Muhammad; Riaz, Muhammad Faraz; Ali, Tariq

doi:10.1016/j.energy.2020.119150

Cited by 79 publications

(50 citation statements)

References 36 publications

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“…Moreover, Abdouli et al [40], in their study for countries part of the BRICS, from 1990 to 2014, showed that population density and FDI inflows increased initially, which reduced CO 2 emissions, as the population and FDI inflows reached the threshold level. However, it is not the political environment of the host country, but that of the country of origin, that determines the positive/adverse effects of FDI on the environmental performance of a host country [41]. That confirms the hypothesis of the FDI Halo, contrary to the effect of economic growth, which deteriorates environmental quality.…”

Section: Brief Literature Reviewmentioning

confidence: 55%

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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: 55%

“…The study by Chang [34], for 65 countries, also shows that increases in FDI can increase CO 2 emissions when the degree of corruption is relatively high. In fact, if the FDI is sourced from developing countries it would be detrimental to the environmental environment of low-and lower-middle-income host countries [41].…”

Section: Discussion Of Resultsmentioning

confidence: 99%

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

2021

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“…It is argued that because of the inflows of FDI, an economy becomes able to invest in several R&D activities that eventually promote ES. Moreover, FDI has encouraging spillover impacts on innovative machineries and employment growth (Adeel-Farooq et al, 2021). However, summing up the above discussion, the present study expects the significant role of FD, TO, and FDI in promoting environmental sustainability.…”

Section: Introductionmentioning

confidence: 62%

Financial Development, Trade Openness, and Foreign Direct Investment: A Battle Between the Measures of Environmental Sustainability

Huo

Ullah

Zulfiqar

et al. 2022

Front. Environ. Sci.

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Deterioration in the environmental quality is a major threat to the sustainable development of an economy as it results in serious economic problems and the researchers are conscious about the environment sustainability. They have identified several factors including financial development, inflow of foreign aid, and openness of trade to promote environmental sustainability. Unfortunately, their findings remain inconclusive as they have imperfectly measured environmental sustainability. This study, thus, aims to contribute to the ongoing debate of environmental sustainability by testing the role of financial development, trade openness, and foreign direct investment (FDI) in promoting environmental sustainability by using adjusted net savings as a measure of environmental sustainability. To do this, the study collects data from 1996 to 2019. The study uses financial development, trade openness, and FDI as predictors and environmental sustainability as an outcome variable. The study applies Auto Regressive Distributive Lag (ARDL) methodology to analyze the impact. The findings show positive contributions of financial development, trade openness, and foreign direct investment in promoting environment sustainability. We suggest encouraging trade through lower-taxation programs and increasing competition in the financial markets through privatization and domestic and international liberalization to stimulate environmental sustainability. We also recommend imposing high taxes and penalties on such activities that damage the quality of the environment.

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“…The proportion of foreign direct investment (FDI) in GDP represents the introduction of green production technology and advanced machinery and equipment through foreign investment, which can improve China’s level of productivity and improve the environmental pollution problem in China. Scholars have found that the policy environment of the country of origin and not the policy environment of the host country determines the positive or negative impact of FDI on the environment of the host country [ 28 ]. Therefore, the government should strictly control the local foreign-invested enterprises and raise relevant standards and requirements.…”

Section: Discussionmentioning

confidence: 99%

Measurement of Coupling Coordination Degree and Spatio-Temporal Characteristics of the Social Economy and Ecological Environment in the Chengdu–Chongqing Urban Agglomeration under High-Quality Development

Wan

et al. 2021

IJERPH

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With rapid urbanization and industrialization, ecological disorders and environmental degradation have become serious, and the promotion of the coordinated development of the social economy and ecological environment is not only a pressing problem to be solved, but also an important step towards sustainable development. The coordinated development of the social economy and eco-environment is conducive to sustainable development. Considering the Chengdu–Chongqing urban agglomeration as a case study, this paper adopts panel data and establishes an index system to evaluate the coupling coordination degree (CCD) between the social economy and ecological environment based on the concept of high-quality development. From the perspective of time and space, the changing laws and characteristics of the CCD are analyzed, and the key factors affecting it are determined using regression analysis. The results show the following: (1) the CCD between the social economy and ecological environment of the Chengdu–Chongqing urban agglomeration presents a low level overall; (2) the CCD in more developed regions is significantly higher than that in less developed regions; thus, the characteristics of spatial differences are obvious; (3) the urbanization rate, ratio of actual use of foreign capital and GDP, ratio of total export-import volume and GDP, proportion of days with good air quality, and per capita public green space area are the main factors affecting the coordinated development of the social economy and ecological environment in the Chengdu–Chongqing urban agglomeration; and (4) Chongqing has obvious endogeneity. Finally, corresponding policy recommendations are provided aimed at promoting rapid economic development in the Chengdu–Chongqing urban agglomeration while focusing on environmental protection and promoting high-quality economic development with ecological environmental protection, while putting forward decision-making suggestions for high-quality development of urban agglomerations.

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Improving the environment begins at home: Revisiting the links between FDI and environment

Cited by 79 publications

References 36 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

Financial Development, Trade Openness, and Foreign Direct Investment: A Battle Between the Measures of Environmental Sustainability

Measurement of Coupling Coordination Degree and Spatio-Temporal Characteristics of the Social Economy and Ecological Environment in the Chengdu–Chongqing Urban Agglomeration under High-Quality Development

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