Abstract
Despite remarkable success in attracting foreign direct investment (FDI) to achieve maximum economic growth, the Next-11 emerging economies grappling with an undesirable situation of environmental degradation have become a hot topic at COP28. Researchers have long focused on this connection, emphasizing the urgent need for international and national environmentalists to promote sustainable development (SD) in these rapidly growing economies under the United Nations (UN) Framework Convention on Climate Change action plans. As a result, this study examines the role of FDI in the N-11 emerging economies, focusing on energy usage and technological innovation within the theoretical framework of the Halo-Haven hypothesis, covering the period from 1990 to 2022. We utilize ARDL, FMOLS, and DOLS techniques to analyze both short-term dynamics and long-term equilibrium relationships, effectively managing heterogeneity, time dynamics, and cross-sectional dependence issues to produce comprehensive results. The long-term analysis supports the haven hypothesis, demonstrating an affirmative relationship between FDI, economic growth, and carbon emissions, whereas energy usage is negatively associated with carbon emissions. Furthermore, the D-H test established a reciprocal causal relationship between variables such as FDI, economic growth, trade openness, and environmental pollution. However, we found a one-way causal correspondence in the usage of green energy, the technological innovation index, and carbon emissions. Given the mixed findings, policymakers should focus on attracting FDI to the green energy sector while reinforcing regulations and implementing stringent oversight for FDI in energy-intensive industries. This approach will ensure that such investments adhere to high environmental standards, thereby benefiting future generations.
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