Does Foreign Direct Investment Impede Environmental Quality in Asian Countries? A Panel Data Analysis

27 Pages Posted: 2 Jun 2020

See all articles by Mohd Arshad Ansari

Mohd Arshad Ansari

affiliation not provided to SSRN

N.A. Khan

University of Hyderabad

Aadil Ganaie

University of Hyderabad

Date Written: June 2019

Abstract

This study aims to investigate the validity of the pollution haven hypothesis for the global panel consisting of 29 countries (Bahrain, Israel, Jordan, Saudi Arabia, Turkey, United Arab Emirates, Oman, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, Uzbekistan, China, Japan, Mongolia, Hong Kong, Korea rep, Bangladesh, India, Pakistan, Sri Lanka, Nepal, IR Iran, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam are taken as the sample of this study) with energy consumption, economic growth and trade openness as additional determinants of environmental degradation over the period 1994–2014. To make the panel data analysis more homogenous, we also investigate the validity of the PHH for a number of sub‐panels. These sub‐panels are constructed based on the sub‐regions of Asia. In this way, we end up with six Asian panels; namely, Global panel, West Asia, Central Asia, East Asia, South Asia and Southeast Asian panels. Based on the IPS and ADF chi‐square unit root test and Pedroni cointegration test results, all variables were found to be first difference stationary and cointegrated. On applying FMOLS, the long‐run results suggest the presence of the pollution haven hypothesis only in East Asian panel. In turn, foreign direct investment reduces environmental degradation, thus rejecting the validity of the pollution haven hypothesis (PHH) in the Southeast Asian panel which is found to be negatively linked to CO emissions. Moreover, energy consumption seems to be the main determinant of carbon emissions and GDP growth has a positive impact on it in all panels except West Asia. Lastly, East Asian countries have followed the Kyoto protocol in order to reduce their emissions level.

Suggested Citation

Ansari, Mohd Arshad and Khan, N.A. and Ganaie, Aadil, Does Foreign Direct Investment Impede Environmental Quality in Asian Countries? A Panel Data Analysis (June 2019). OPEC Energy Review, Vol. 43, Issue 2, pp. 109-135, 2019, Available at SSRN: https://ssrn.com/abstract=3615256 or http://dx.doi.org/10.1111/opec.12144

Mohd Arshad Ansari (Contact Author)

affiliation not provided to SSRN

No Address Available

N.A. Khan

University of Hyderabad ( email )

Central University (PO)
Andhra Pradesh
Hyderabad, CA Andhra Pradesh 500 046
India

Aadil Ganaie

University of Hyderabad ( email )

Hyderabad
India
8897407294 (Phone)

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