{"title":"Nonlinear relationships between Foreign Direct Investment decisions and environmental degradation in high- and middle-income countries","authors":"Rafaela Vital Caetano, António Cardoso Marques","doi":"10.1007/s40812-023-00282-0","DOIUrl":null,"url":null,"abstract":"Abstract Globalization, although beneficial in spreading knowledge and improving green technologies worldwide, is also considered one of the main drivers of global warming. Recent world events, such as the pandemic, with all its economic and social consequences, have exposed the external dependence of many countries, particularly the reliance of many developing countries on foreign investment. Although it contributes to economic growth, Foreign Direct Investment may also be harmful to the environment. Hence, this study analyses the impact of Foreign Direct Investment on emissions of Greenhouse Gases, Carbon Dioxide, Nitrous Oxide and Particulate Matter 2.5. A Panel Autoregressive Distributed Lag model was conducted for a group of 25 high-income and 10 middle-income countries from 1995 to 2019, allowing the analysis of short- and long-run impacts. Given the likelihood of nonlinear impacts, a Nonlinear Panel Autoregressive Distributed Lag model was also conducted to provide a more detailed understanding of the effects of expansion or contraction on the variables, and also to analyse short- and long-run impacts. The main findings suggest that electrification and energy transition away from fossil fuels to renewable energy may be crucial to limiting the polluting effect of Gross Fixed Capital Formation, Trade Openness and Foreign Direct Investment. However, it would be a mistake to simply reduce these three factors as the results reveal that it also contributes to increase pollution. Foreign Direct Investment and Trade Openness reduce environmental degradation in high-income countries and increase it in middle-income countries, except for Nitrous Oxide emissions.","PeriodicalId":38200,"journal":{"name":"Journal of Industrial and Business Economics","volume":null,"pages":null},"PeriodicalIF":1.5000,"publicationDate":"2023-10-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Industrial and Business Economics","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1007/s40812-023-00282-0","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
Abstract Globalization, although beneficial in spreading knowledge and improving green technologies worldwide, is also considered one of the main drivers of global warming. Recent world events, such as the pandemic, with all its economic and social consequences, have exposed the external dependence of many countries, particularly the reliance of many developing countries on foreign investment. Although it contributes to economic growth, Foreign Direct Investment may also be harmful to the environment. Hence, this study analyses the impact of Foreign Direct Investment on emissions of Greenhouse Gases, Carbon Dioxide, Nitrous Oxide and Particulate Matter 2.5. A Panel Autoregressive Distributed Lag model was conducted for a group of 25 high-income and 10 middle-income countries from 1995 to 2019, allowing the analysis of short- and long-run impacts. Given the likelihood of nonlinear impacts, a Nonlinear Panel Autoregressive Distributed Lag model was also conducted to provide a more detailed understanding of the effects of expansion or contraction on the variables, and also to analyse short- and long-run impacts. The main findings suggest that electrification and energy transition away from fossil fuels to renewable energy may be crucial to limiting the polluting effect of Gross Fixed Capital Formation, Trade Openness and Foreign Direct Investment. However, it would be a mistake to simply reduce these three factors as the results reveal that it also contributes to increase pollution. Foreign Direct Investment and Trade Openness reduce environmental degradation in high-income countries and increase it in middle-income countries, except for Nitrous Oxide emissions.
期刊介绍:
This peer-reviewed journal, established in 1973, uses the lenses of industrial and business economics to investigate issues relevant to scholars, managers and policy makers.
The key areas of interest of JIBE are: industrial organization and policy; international business and international economics; innovation and entrepreneurship; corporate governance and finance.
Within these key areas, JIBE pays special attention to topics relating to grand challenges in a transforming world. A non exhaustive list of current issues includes: emergent technologies and industry dynamics; the digitalization of industries and financial markets; evolving multinationals and global value chains; environmental change and green transition; sustainable development of emerging economies; competition, regulation and structural policies in the platform economy.
JIBE welcomes papers that combine advancements in the theoretical understanding of phenomena with rigorous, systematic and original evidence-based empirical analysis, using quantitative or qualitative approaches as well as experimental and mixed methods. The journal is open to industry-, firm- and individual-level analyses, while the geographic scope may vary from subnational regions to nations and supra-national contexts, with a particular consideration of the EU and other integration processes.
The journal also publishes special issues and symposia aimed at opening debate among scholars on specific topics and discovery-type papers on emerging issues in industrial and business economics.
The journal is owned by the Associazione Amici di Economia e Politica Industriale.