Investigation of the Foreign Direct Investment and Environmental Pollution Nexus for Developing Countries

2021 ◽  
pp. 320-338
Author(s):  
Orkun Çelik ◽  
Özge Korkmaz ◽  
Zafer Adalı
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Environmental Pollution ◽  
Direct Investment ◽  
Panel Cointegration ◽  
Cointegration Test ◽  
Annual Data ◽  
Pollution Haven ◽  
Panel Cointegration Test

In theory, the foreign direct investment and environmental pollution nexus is explained by three hypotheses. Firstly, pollution haven hypothesis assumes that there is a positive nexus between these variables. Secondly, pollution halo hypothesis supposes that there is negative connection between these variables. Lastly, neutrality hypothesis asserts the non-existence of the connection between these variables. In recent years, many researchers have frequently tested whether these hypotheses are valid for different countries. In this study, applying Westerlund panel cointegration test, the authors aim to explore the nexus between foreign direct investment and environmental pollution for 23 developing countries after global crisis. For this aim, they use annual data covering the period 2009-2019. According to the obtained empirical findings, the presence of the long-term nexus between foreign direct investment and environmental pollution is not detected for 23 developing countries. Accordingly, the authors can say that there is neutrality hypothesis.

scholarly journals QUALITY OF INSTITUTIONS AND FOREIGN DIRECT INVESTMENT IN DEVELOPING COUNTRIES: CAUSALITY TESTS FOR CROSS‐COUNTRY PANELS

2006 ◽  
Vol 7 (3) ◽  
pp. 103-110 ◽  
Author(s):  
Hea-Jung Hyun
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Panel Cointegration ◽  
Long Run ◽  
Panel Cointegration Test ◽  
Quality Of Institutions ◽  
Causality Tests ◽  
Short Run

This paper analyzes the short-run and long-run dynamics between quality of institutions and foreign direct investment (FDI) in the sample of 62 developing countries covering the period 1984–2003. Panel cointegration test and FM OLS (Fully Modified OLS) estimators are used to test for cointegration. For short‐run dynamics, we estimate error correction model using fixed effect OLS and system GMM estimators. Institutional quality and FDI are found to have bi‐directional cointegrating relationship in the long-run. However, there is no evidence in favor of short-run causality between two variables.

scholarly journals Impacts of Foreign Direct Investment and Industrial Structure Transformation on Haze Pollution across China

2021 ◽  
Vol 13 (10) ◽  
pp. 5439
Author(s):  
Chenggang Li ◽  
Tao Lin ◽  
Zhenci Xu ◽  
Yuzhu Chen
Keyword(s):  
Foreign Direct Investment ◽  
Environmental Pollution ◽  
Direct Investment ◽  
Industrial Structure ◽  
Spatial Data Analysis ◽  
Annual Data ◽  
Eastern Region ◽  
Structure Transformation ◽  
Haze Pollution ◽  
The Impact

With the development of economic globalization, some local environmental pollution has become a global environmental problem through international trade and transnational investment. This paper selects the annual data of 30 provinces in China from 2000 to 2017 and adopts exploratory spatial data analysis methods to explore the spatial agglomeration characteristics of haze pollution in China’s provinces. Furthermore, this paper constructs a spatial econometric model to test the impact of foreign direct investment (FDI) and industrial structure transformation on haze pollution. The research results show that the high-high concentration area of haze pollution in China has shifted from the central and western regions to the eastern region and from inland regions to coastal regions. When FDI increases by 1%, haze pollution in local and neighboring areas will be reduced by 0.066% and 0.3538%, respectively. However, the impact of FDI on haze pollution is heterogeneous in different stages of economic development. FDI can improve the rationalization level of industrial structure, and then inhibit the haze pollution. However, FDI inhibits the upgrading level of industrial structure to a certain extent, and then aggravates the haze pollution. The research in this paper provides an important decision-making basis for coordinating the relationship between FDI and environmental pollution and realizing green development.

FOREIGN DIRECT INVESMENT OUTFLOWS AND ENVIRONMENTAL POLLUTION: HIDDEN COINTEGRATION ANALYSIS FOR TURKEY

2021 ◽  
Vol 6 (11) ◽  
pp. 165-182
Author(s):  
Ahmet Emrah TAYYAR
Keyword(s):  
Carbon Dioxide ◽  
Foreign Direct Investment ◽  
Environmental Pollution ◽  
Environmental Quality ◽  
Carbon Dioxide Emissions ◽  
Direct Investment ◽  
Causality Relationship ◽  
Cointegration Relationship

The relationship between foreign direct investment, which is a type of cross-border and long-term investment, and environmental quality is a current issue that is heavily debated. Foreign direct invesments can ensure economic growth and development of countries, while also causing a change in environmental quality. In the research conducted, it is seen that changes in carbon dioxide emissions with foreign direct capital inflows are mainly investigated from the point of view of the host countries. However, foreign direct invesment outflows may have an impact on the environmental quality of the home country. Because foreign direct invesment outflows can enable the transfer of more environmentally friendly techonogies to the country and strengthen management skills. The impact of foreign direct investment outflows on the home country's environmental pollution is shaped by many factors (scale, technique, and composition effects). In addition to these effects, it is necessary to pay attention to the regional and sectoral distribution of capital outflows. The main aim of this study is to examine the links between Turkey's foreign direct invesment outflows and carbon dioxide emissions for the period 1990-2018. For this reason, a unit root test was applied to variables whose natural logarithm was taken. Tests showed that all series are stable of the same degree. Engle&Granger(1987) and Granger&Yoon(2002) tests were used to determine the cointegration relationship between variables. The crouching error correction model(CECM) was applied to determine the causality relationship. According to the results of the analysis; i) In terms of the Engle&Granger(1987) test, there was no long-term relationship between variables. ii) According to the Granger&Yoon(2002) test, it was determined that there is a bidirectional hidden cointegration relationship between the positive shocks of carbon dioxide emissions and negative shocks of foreign direct invesment outflows. iii) There is a bidirectional asymmetric causality relationship between the positive shocks of carbon dioxide emissions and the negative shocks of foreign direct invesment outflows. iv) It is observed that 1% negative shocks in foreign direct invesment outflows reduce positive shocks in carbon dioxide emissions by 0,26%. As a result, since negative situations in foreign direct invesment outflows have an effect on improving the quality of the environment, the environmental dimension should be taken into account in the policies to be made.

Terrorism, environmental pollution, foreign direct investment (FDI), energy consumption, and economic growth: Evidences from China, India, Israel, and Turkey

2020 ◽  
pp. 0958305X2091940
Author(s):  
Melike E Bildirici
Keyword(s):  
Economic Growth ◽  
Foreign Direct Investment ◽  
Energy Consumption ◽  
Environmental Pollution ◽  
Direct Investment ◽  
Panel Cointegration ◽  
Panel Causality ◽  
Policy And Strategy ◽  
Cointegration Tests ◽  
Causality Tests

In this paper, it was aimed to investigate the relation between economic growth, terrorism, foreign direct investment (FDI) inflow, environmental pollution, and energy consumption in China, India, Israel, and Turkey for a time span of 43 years from 1975 to 2017. Three different panel cointegration methods to determine the cointegration relation and two different causality methods to find the direction of causality were simultaneously used, since the presence of cointegration and direction of causality are fundamental to design economic policy and strategy. After similar results from panel cointegration tests were obtained, the causality tests were applied. Panel causality tests determined the evidence of uni-directional causality from terrorism, FDI, and energy usage to CO2 emission.

scholarly journals Current account determinants in ASEAN 6

2018 ◽  
Vol 21 (2) ◽  
Author(s):  
Novi Ariyani ◽  
Fajar Wahyu Priyanto ◽  
Lilis Yuliati
Keyword(s):  
Foreign Direct Investment ◽  
Exchange Rate ◽  
Interest Rate ◽  
Gross Domestic Product ◽  
Current Account ◽  
Direct Investment ◽  
Domestic Product ◽  
Annual Data ◽  
The Current Account

This study aims to analyze the factors that influence the export activity in the ASEAN region countries such as Indonesia, Singapore, Thailand, Malaysia, Philippines and Vietnam during 2001 - 2016 by using annual data. The factors that influence gross domestic product (GDP), interest rate, foreign direct investment (FDI) and exchange rate. The method used in the research is panel Vector Error Correlation Model (PVECM). The results show that Gross Domestic Product (GDP) negatively affects the current account in the short term. The interest rate variable negatively affects the current account in the long term. The Foreign Direct Investment (FDI) variable negatively affects the current account in the long term. Furthermore, the exchange rate variable negatively affects the current account in the long term.

scholarly journals Impact of Foreign Direct Investment on Domestic Investment in Developing Countries

2020 ◽  
Vol 6 (9) ◽  
pp. 256-266
Author(s):  
A. Mamatkulov
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Developing Economies ◽  
Negative Impact ◽  
Domestic Investment ◽  
Short Term ◽  
Total Investment ◽  
The Impact

Author analyzes the impact of foreign direct investment on domestic investment in host developing countries and checks whether a foreign direct investment has a “positive” or “negative” impact on domestic investment, as well as evaluating the impact of selected variables on this relationship. Using a full sample, the main conclusion of this study is that FDI does have a positive (crowding out) effect on domestic investment in this sample of developing economies. In the short term, an increase in FDI by one percentage point as a percentage of GDP leads to an increase in total investment as a percentage of the host country’s GDP of about 10.7%, while in the long term this effect is about 31% dollar terms, one US dollar represents us 1.7$ of total investment in the short term and us 3.1$ in the long term. Based on the results of this study, it was once again proved that inflation hinders domestic investment in host countries by 0.04% and 0.12% in the short and long term, respectively.

A meta-analysis of FDI and environmental regulations

2014 ◽  
Vol 20 (2) ◽  
pp. 185-208 ◽  
Author(s):  
Alief A. Rezza
Keyword(s):  
Developing Countries ◽  
Foreign Direct Investment ◽  
Research Design ◽  
Government Spending ◽  
Direct Investment ◽  
Environmental Regulations ◽  
Meta Analysis ◽  
Data Sets ◽  
Pollution Haven Hypothesis ◽  
Pollution Haven

AbstractPrevious authors have been unable to agree on whether environmental regulations hinder foreign direct investment (FDI). The empirical evidence in this domain remains inconclusive because of the contrasting results observed in the literature, owing to the differing characteristics of the data sets and models used in previous studies. The present study carries out a meta-analysis on a sample of published and unpublished papers on the so-called pollution haven hypothesis (PHH) in order to investigate whether certain aspects of research design affect the presented findings. The paper offers explanations for the mixed findings reported in the literature by suggesting that certain aspects of research design are crucial to explaining their significance. The PHH is more likely to be supported by studies that define FDI as the establishment of new plants and those that use government spending as a proxy for the strictness of environmental regulations. Moreover, focusing investigations on pollution-intensive industries or developing countries hardly increases the likelihood of achieving results that support the PHH.

The Impact of Foreign Direct Investment on CO2 Emission

2017 ◽  
pp. 81-92 ◽  
Author(s):  
Oguzhan Aydemir ◽  
Feyyaz Zeren
Keyword(s):  
Foreign Direct Investment ◽  
Co2 Emissions ◽  
Direct Investment ◽  
Panel Data Analysis ◽  
Panel Cointegration ◽  
Pollution Haven Hypothesis ◽  
Pollution Haven ◽  
Carbon Dioxide Co2 ◽  
The Impact ◽  
Pollution Halo Hypothesis

In the literature, the impact of Foreign Direct Investment (FDI) on carbon dioxide (CO2) emissions is explained by two different hypotheses: Pollution Halo and Pollution Haven Hypothesis. While Pollution Halo hypothesis states that FDI provides advanced technology to countries and accordingly decreases CO2 emissions, Pollution Haven Hypothesis indicates that there is a positive relationship between FDI and CO2. In this regard, in this study, the impact of FDI on CO2 emissions in the selected 10 of G-20 countries in the period of 1970-2010 is investigated by using panel data analysis. The empirical findings show that panels have cross-section dependence and these two panels are stationary in different levels. Moreover, the existence of long term relationship between panels is found by using Durbin Hausmann panel cointegration test. The results of the study also show that while Pollution Halo Hypothesis is valid for USA, France and Argentina, Pollution Haven Hypothesis is valid for UK, Canada, Australia, South Africa, Italy, Mexico and Saudi Arabia.

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