Testing the validity of pollution haven and pollution halo hypotheses in BRICMT countries by Fourier Bootstrap AARDL method and Fourier Bootstrap Toda-Yamamoto causality approach

Abstract

It is useful to analyze the factors, polluting the livable environment, whose sustainability and protection are vital to all living things, and to take the necessary precautions promptly. Within this scope, the effects of foreign trade and investments on environmental pollution in BRICMT (Brazil, Russia, India, China, Mexico, and Turkey) countries were analyzed with the Fourier Kwiatkowski–Phillips–Schmidt–Shin (KPSS) stationarity test, Fourier Bootstrap augumented autoregressive distributive lag (AARDL) method, and Fourier Bootstrap Toda-Yamamoto causality test for the period 1980–2021 in this study. According to the findings, the pollution haven hypothesis is valid since increasing exports and foreign investment in China increased environmental pollution both in the short term and the long term. While environmental pollution increased in China, Brazil, Mexico, and Turkey with increasing imports, it decreased in Russia. The short-term impact of imports on rising environmental pollution is also valid for Brazil. Since foreign investment increases environmental pollution in Brazil and Mexico in the long run, the pollution haven hypothesis is valid in these countries. In Russia and Mexico, where there are findings that foreign investment reduces environmental pollution in the short term, the pollution halo hypothesis is valid in the short run. According to the Fourier Bootstrap Toda-Yamamoto causality test results, it was determined that there is causality from exports and imports to environmental pollution in China and India and from foreign investment to environmental pollution in Russia and Brazil.