Impact of Foreign Direct Investment (FDI), Institutional Performance and Scientific Innovations on Environmental Degradation: Evidence from OIC Countries

Abstract

The aim of this study is to examine the effect of foreign direct investment (FDI), institutional performance and scientific innovations on environmental degradation (ecological footprints) in selected OIC member countries. In this study, panel data analysis of selected OIC lower-middle income member countries over the period of 2000-2022 has been carried out. Cross-section dependance test has been done to check if there is cross-section dependence present among the variables and then second generation unit rot test has been employed to test the level of stationarity. Upon the recommendation of these tests, Pool Mean Group (PMG) has been applied to investigate the long run associations among the dependent and independent variables. The findings of this study show that FDI has significant negative impact on ecological footprint and has been acting as environmentally friendly in lower-middle countries. Scientific innovations has significant positive impact on ecological footprint whereas Institutional performance has positive impact on ecological footprint has significant negative impact in high lower-middle income countries. Furthermore, the study has trade openness has positive and significant impact on ecological footprint and GDP per capita has insignificant impact on ecological footprint.