Environmental impact of infrastructure-led Chinese outward FDI, tourism development and technology innovation: a regional country analysis

Abstract

Investment and construction of energy and transport-related infrastructure are closely linked to the achievement of sustainable development goals. China’s infrastructure-led foreign investment, technical integration, and tourism with Belt and Road Initiative (BRI) countries have maintained exponential growth. This growth certainly has an impact on economic development mode and environmental sustainability. Therefore, this study examines the impact of infrastructure-led Chinese outward foreign direct investment, tourism development, and technology innovation on carbon emissions across the selected BRI node countries and respective regions. This study employs cross-sectional autoregressive distributive lag model to deal with parameters and cross-sectional heterogeneity. The results exhibit that foreign direct investment and technology innovation reduces carbon emissions in the long run, while tourism development and its interaction with foreign direct investment led to higher emissions in the overall BRI sample. In contrast, the regional estimates show significant variations in the magnitude and direction of the relationship, where foreign direct investment produces an emissions-increasing effect in South Asian and MENA countries. Moreover, the results support the validity of the Environmental Kuznets Curve hypothesis in overall and regional samples. These results are also endorsed by common correlated effects means group estimator and imply relevant policies.