The asymmetric associations between foreign direct investment inflows, terrorism, CO2 emissions, and economic growth: a tale of two shocks

Abstract

Foreign direct investments can exert ambiguous effects on the environmental quality of the host economies. At the same time, terrorism is a worldwide phenomenon that affects human life, FDI inflows, economic growth, and, most importantly, environmental well-being. Hence, it can be expected that there are relationships between terrorism, foreign direct investment inflows, and carbon dioxide emissions. However, in the previous literature, less attention has been given to explore these nexuses. In addition, the possible nonlinearities in data are also mostly ignored in the preceding related studies. Against this backdrop, this paper explores the linear and nonlinear influences of terrorism and foreign direct investment inflows on carbon dioxide emissions, controlling for energy consumption and economic growth within the model, on carbon dioxide emissions in the context of ten global economies that are most impacted by terrorism. To this end, we used the data from 1973 to 2016 and deployed the linear and non-linear autoregressive distributed lag methods to scrutinize the environmental impacts of the explanatory variables of concern. The results confirmed the presence of non-linearities in the relationships between terrorism, inflows of foreign direct investments, and carbon dioxide emissions. Furthermore, the findings revealed that the positive shocks to terrorism and foreign direct investment inflows significantly deteriorate the environment with a dominating effect. Unlike the previous studies, this current study validates the pollution haven hypothesis for the sample economies. Energy consumption and economic growth were also evidenced to exacerbate the carbon dioxide emission levels in all selected countries. Based on these results, we recommend that our sample economies should focus on promoting education, employment, economic stability, and public awareness to eradicate terrorism which, in turn, can mitigate the emissions of carbon dioxide further. In addition, stringent environmental regulations on foreign direct investment inflows are required to reduce the adverse environmental effects of such sources of foreign finance. Furthermore, the international firms should be encouraged to invest in cleaner technologies by offering them tax benefits and other financial incentives.

Repercussions of Sustainable Agricultural Productivity, Foreign Direct Investment, Renewable Energy, and Environmental Decay: Recent Evidence from Latin America and the Caribbean

“…The research findings indicated the two leading sectors, i.e., GDP and FDI, as environmentally damaging, which pointed out that the unambiguous economic efficient system with positive climate change will exceed the action cost. This research also declared the economy's positive contributors and eco-friendly sectors, such as renewable energy consumption and production Bekun et al, 2021;Chishti et al, 2021;Paramati et al, 2022). This research suggests that state handlers should focus on eco-friendly sectors to enhance the financial position of their countries and sort out the problems and uncertainties of other sectors.…”

“…Agriculture is a contributor to GHG emissions and is sensitive to GHG release (IPCC 2007). The World Bank (2013) stated that between one-fourth and one-third of the world's total GHG emissions are generated by agriculture, from both on-farm operations, i.e., approximately 10%-12% of global emissions, and land use and land cover changes to cropland, including an additional 12%-20% (Mulatu et al, 2016;Bekun et al, 2021;Chishti et al, 2021). According to Malhi et al (2021), increased CO 2 levels resulted in improved crop fertilization and decreased energy requirements from heat (Eshete et al, 2020).…”

Economic Growth at the Expense of Environmental Degradation: Evidence from the Philippines

“…Some of the literature that included the Philippines in their analysis of the impact of economic growth and FDI was the study conducted by Chishti et al (2021). Their findings revealed that pollution in the Philippines is worsened by the growth of GDP and FDI only in the short run.…”

Does institutional quality matter for environmental sustainability?

“…Many studies have examined its impact on CO 2 emissions in developed and developing countries. Xingang et al (2019) and Chishti et al (2021) found a positive relationship between foreign direct investment and CO 2 emissions in developing countries. Jalal et al (2011) also found positive effects of foreign direct investment on CO 2 emissions.…”

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