Validity Of Pollution Haven Hypothesis Research Articles

FDI and CO2 emissions in developing countries: the role of human capital.

FDI inflows remain an important source of economic growth and technology transfer for developing countries. However, the proponents of the pollution haven hypothesis (PHH) argue that FDI inflows may result in the production of polluted goods in poor economies. The empirical testing of PHH reveals conflicting outcomes on the subject. This study argues that foreign firms' choice of specific technologies and hence the validity of PHH can be determined by host countries' level of education. For developing economies having low levels of schooling, FDI inflows will accompany polluted technologies. Nonetheless, when education levels exceed certain thresholds, FDI inflows may reduce CO2 emissions. For our empirical investigation, we rely upon a large panel of 108 developing countries during 2000-2016. Our estimated outcomes, based on the panel cointegration method and panel vector error correction methods (P-VECM), confirm these moderating effects of human capital in the FDI-CO2 emissions nexus. The empirical results also confirm the presence of the environmental Kuznets curve (EKC) for developing countries. These results have important policy implications for the sample economies.

A dynamic analysis of the impact of FDI, on economic growth and carbon emission, evidence from China, India and Singapore.

This study dynamically examines the impact of foreign direct investment and other explanatory variables on economic growth and carbon emissions, and tests the validity of pollution haven hypothesis (PHH) and environmental Kuznets curve (EKC) hypothesis in China, India, and Singapore from 1980 to 2020. The results of Westerlund's (Oxford Bulletin of Economics and Statistics, 69(6):709-748, 2007) panel cointegration test illustrate long-run equilibrium relationships among the proposed set of panel variables in the model. The estimated parameters of the AMG, CCEMG, and MG estimators in each of the specified models show that renewable and non-renewable energy consumption, foreign direct investment, and capital accumulation all have significant and progressive effects on economic growth. However, the labor force is insignificant and carbon emissions have a significant negative impact on economic growth. Non-renewable energy consumption significantly stimulates and renewable energy consumption significantly reduces carbon emissions. Moreover, the moderating role of non-renewable energy in the impact of foreign direct investment on carbon emissions is significantly positive, thus validating the PHH. The moderating role of renewable energy consumption in the impact of foreign direct investment on carbon emissions is significantly negative. The study's analysis also clearly validated the inverted U-shaped EKC hypothesis in China, India, and Singapore. Policymakers in emerging economies must prioritize the maturity of renewable energy, which not only increases productivity but also protects the environment from damage by reducing carbon dioxide emissions. The governments of China, India, and Singapore should initiate direct foreign inflows based on advanced and clean technologies to avoid environmental degradation and drive higher growth in these economies.

Does pollution haven hypothesis hold in newly industrialized countries? Evidence from ecological footprint.

This study aims to investigate the validity of pollution haven hypothesis for the period from 1982 to 2013 in ten newly industrialized countries. For this purpose, we examine the relationship between real income, foreign direct investment, energy consumption, and ecological footprint using second-generation panel data methodology to take into account the cross-sectional dependence among newly industrialized countries. In doing so, the possible nonlinear relationship between foreign direct investment and environmental degradation is also searched. The results show that increased energy consumption and economic growth lead to increase in ecological footprint. Moreover, the U-shaped relationship between foreign direct investment and ecological footprint is confirmed in newly industrialized countries.

Interrelationships among foreign direct investments, renewable energy, and CO2 emissions for different European country groups: a panel ARDL approach.

This study estimated unbalanced panel data analysis to investigate the relationship among CO2 emissions, GDP, renewable and non-renewable energy utilization, and foreign direct investment (FDI) inflow in 26 European countries. Moreover, we investigated the role of environmental regulations in validation of the pollution haven hypothesis (PHH) in two EU country groups, namely 1-4th and 5th enlargement countries of EU, since their adaptation periods of environmental legislation may indicate differences. Empirical results confirmed the validation of environmental Kuznets curve (EKC) hypothesis and PHH for overall EU countries. However, results differ between country groups in EU. For example, while results confirm the evidence of EKC in 5th enlargement countries, they do not support in 1-4th enlargement countries. Moreover, while environmental regulations do not play an important role in the validity of PHH, they are important factors in the validity of EKC in overall EU countries. Granger causalities showed that economic growth causes energy consumption and FDI inflow. Since renewable energy mitigates the emissions, EU countries should enhance green technology and energy efficiency to ensure sustainable development. What is more, EU countries need to tighten the environmental regulations on FDI inflow. Therefore, our results support the new framework by European Commission on screening the FDI inflows throughout the EU zone.

Foreign Direct Investments and CO2 Emissions Relationship: The Case of Turkey

In this study, it is aimed to analyze the environmental impact of foreign direct investment. The theoretical and applied literature on the relationship between foreign direct investment and carbon dioxide (CO2) emissions is presented. The study examines the relationship between foreign direct investment and pollution by using Johansen Cointegration test and vector error correction model in Turkey, for 1974-2013 period. The main conclusion of the study is that foreign direct investment positively affects carbon dioxide emissions in the long run. The results indicate the validity of Pollution Haven hypothesis in Turkey.

Foreign direct investment, income, and environmental pollution in developing countries: Panel data analysis of Latin America

Effects of foreign direct investment (FDI) and income on pollution emissions are examined using time series data from 1980 to 2010 for 14 Latin American countries. Specifically, we test the validity of Pollution Haven Hypothesis (PHH) and Environmental Kuznets Curve (EKC) hypothesis for this region. Results from panel fixed and random effects models that controlled the effects of physical capital, energy, human capital, population density, and unemployment rate indicate the validity of both the PHH and EKC hypothesis. Estimating two separate models for high and low-income countries does not alter the findings for the PHH, however, the impacts of human capital on pollution emission are found to be different for the two groups of countries. Policies that focus on attracting clean and energy efficient industries through FDI have potential to improve environmental health while enhancing economic growth in Latin America.

Multiple environmental policies and pollution haven hypothesis: Evidence from China's polluting industries

Theoretical studies of pollution haven hypothesis predict that differentiated environmental regulation policies will result in inter-country relocation of polluting industries. This paper investigates pollution haven hypothesis at domestic level in China. Using panel data of 30 provincial level regions for the period 2004 to 2013, this paper empirically examines to what extent multiple environmental policies affect intra-country relocation of polluting industries in China. It is found that the implementation of both economic policy instrument like pollution discharge fee and public participation like letter complaints on environmental problems encourages industrial relocation, whereas the implementation of environmental legal policy instrument like laws, regulations and rules prevents polluting industries from relocating to other regions. It is also found that the relocation effect of environmental policies varies with industrial characteristics. Compared with water pollution-intensive industry, air pollution-intensive industry dominated by stated-owned capitals are insensitive to legal policy instruments. These findings suggest that the validity of pollution haven hypothesis is jointly associated with the type of environmental policy as well as industrial characteristics.

Investigating the validity of pollution haven hypothesis in the gulf cooperation council (GCC) countries

This study investigated the validity of the pollution haven hypothesis in the Gulf Cooperation Council (GCC) countries using a multivariate framework. To achieve the goal of this study, the non-stationary panel techniques were used to examine the hypothesis from 1980 to 2009. Based on the Pedroni cointegration test results, it was found that the variables are cointegrated. Moreover, the Fully Modified OLS results showed that energy consumption and GDP growth increase CO2 emission while foreign direct investment inflows have a long run negative relationship with CO2 emission. Furthermore, based on the short run Granger causality test results, FDI has no short run causal relationship with CO2 emission and energy consumption while energy consumption and GDP growth have a positive causal relationship with CO2 emission. Thus, the results of this study indicate that energy consumption and GDP growth are the source of pollution in the GCC countries and not the foreign direct investment inflows. Thus, the study recommended that these countries should utilize policies to encourage inward foreign investment since it plays an important role in stimulating GDP growth.