The Impact of Foreign Direct Investment on Environment Degradation: Evidence from Emerging Markets in Asia

• Published in: International journal of environmental research and public health Vol. 16; no. 9; p. 1636
• Main Authors: To, Anh Hoang, Ha, Dao Thi-Thieu, Nguyen, Ha Minh, Vo, Duc Hong
• Format: Journal Article
• Language: English
• Published: Switzerland MDPI AG 10-05-2019; MDPI
• Subjects: Air Pollutants - analysis; Air pollution; Air Pollution - analysis; Air Pollution - statistics & numerical data; Asia; Carbon dioxide; Carbon Dioxide - analysis; Developing countries; Economic development; Economic Development - statistics & numerical data; Economic growth; Economic models; Emerging markets; Emissions; Energy consumption; Environment; Environmental degradation; Environmental impact; Environmental law; Environmental policy; Environmental regulations; Foreign investment; GDP; Gross Domestic Product; Hypotheses; Impact analysis; Industrial development; Inequality; Internationality; Investment; Investments - economics; Investments - statistics & numerical data; LDCs; Per capita; Standard of living; Stream pollution; Studies; Theory; Asia; Vietnam; Philippines; China; Malaysia; Thailand; Indonesia; India; environment degradation; DOLS; Vietnam; FDI; pollution heaven hypothesis FMOLS; causality
• ISSN: 1660-4601; 1661-7827; 1660-4601
• DOI: 10.3390/ijerph16091636

This study is conducted to examine the concerns of the foreign direct investment (FDI) causing environment degradation and also to test the validity of the traditional Environmental Kuznets Curve (EKC) in the context of emerging markets in the Asian region. Data of these countries from 1980-2016 are utilised. This study employs panel cointegration Fully Modified Ordinary Least Squares (FMOLS), which treats the endogeneity problem, and its estimators are adjusted for serial correlation. Moreover, this study also uses panel Dynamic Ordinary Least Squares (DOLS), which includes contemporaneous value, leads and, lags of the first difference of the regressors to correct endogeneity problems and serial correlations. Findings from this study indicate that the pollution heaven hypothesis and the EKC curve are generally valid in the region. In addition, FDI has a strong impact on the environment.