ECONOMIC IMPACTS RESULTING FROM THE PROBLEMS OF FOREIGN DIRECT INVESTMENT IN POLLUTING INDUSTRIES - AN EMPIRICAL STUDY

Abstract

The relationship between foreign direct investment and the environment is one of the most important contemporary economic issues because of its dangerous environmental effects. Despite the positive aspects of this relationship, it is not without the negative impact that causes serious damage at the national level. Although many thinkers consider FDI to be an important factor in economic development, we see it as a phenomenon with negative environmental impacts, sometimes making it a negative factor in the development process. The problem of the study is the contradiction between the process of attracting foreign direct investment and long-term environmental protection policies, because foreign direct investment flows may lead to the depletion of natural resources, the disruption of their balance and the pollution of the environment. The protection of the environment is to rationalize the use of natural resources without pollution and preserve them for future generations This means that there may be a conflict between foreign direct investment flows in terms of the use and conservation of natural resources, on one hand, and higher production costs in the case of environmental conditions, on the other hand. In light of the foregoing, this study examines the problem of the extent of the conflict between the process of attracting foreign direct investment and long-term environmental protection policies, especially in the petroleum sector as the most economic sector in relation to environmental policies. This study examines the impact of environmental pollution on the oil sector within the Arab Republic of Egypt, expressed by the emission of carbon dioxide (CO2) on foreign direct investment flows during the study period (1980/2015). The carbon dioxide emissions variable was used as an indicator of environmental policy and some other independent variables. The linear regression model was used to measure environmental impact. The results of the study showed a positive and significant relationship between carbon dioxide emissions and foreign direct investment. When the CO2 emissions increase by 1%, foreign direct investment increases by 3.39% at a significant level of 10%. The research uses the extrapolation method through the study of previous studies, scientific books and scientific periodicals, in order to identify the problem in question; and analytical method to analyze the data that prove the validity or lack of validity of research hypotheses based on the research. (1980-2015). The tools used are descriptive analysis tools through the theoretical framework of research and quantitative tools through the use of the linear regression model. One of the most important recommendations of the research is that the Egyptian government should work to attract more foreign direct investment instead of relying on loans and aid to fill the deficit in the budget by providing more incentives and facilities that attract investments on scientific bases, To implement them, and in a manner not inconsistent with the national interest. Supporting political and security stability is also an important and vital requirement for establishing a safe environment for investment in political influences that plays an important role in shaping the economic climate in general and investment in particular.