Understanding the imperativeness of environmental-related technological innovations in the FDI – Environmental performance nexus

Abstract

The inflow of foreign direct investment (FDI) is considered a veritable pathway to the developmental prospects of emerging economies. To some, FDI bridles environmental pollution, while to others, it enhances environmental performance. For updated insights, we critiqued the effect of FDI on environmental quality amidst environmental-related technological innovations (EVT) within the BRICS economies. On the basis of the random coefficients regression and the panel nonlinear-ARDL (PNARDL) technique notable for robust estimates even in the face of cross-sectional exigencies, it is rectified that the enlisted series trend towards long-run equilibrium. The estimates also indicate that carbon emissions in BRICS countries are systemic, and must be fought head-on to attain sustainable development. Furthermore, FDI and EVT, to an extent and with some variations across the countries, compromised environmental quality significantly, but with the passage of time, the interactions of both factors ensure cleaner environments. Additionally, human capital development and renewable energy consumption mitigate pollution in the BRICS countries against the negative impact of traditional energy consumptions. The outcome of the nonlinear specification also establishes that both positive and negative interactions of FDI and technology stimulate cleaner environments, but the effects are asymmetric in both the long and short run.