The Effect of Foreign Direct Investment on Environmental Pollution: New Evidence from Panel CCE for Different Income Groups
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Abstract
FDI may have positive effects on welfare with the transfer of environmentally friendly techniques of production to developing countries from developed countries.This study examines the effects of foreign direct investment, per capita GDP and energy consumption on CO2 emission in the different four income groups from 1992 to 2014 by using common correlated effect mean group estimator. The panel results reveal that foreign direct investments have statistically significant negative effects to CO2 emissions in Canada, Egypt, India, Mongolia, Sri Lanka, Ukraine, Brazil, Dominican Republic, Jordan, Finland, Iceland, Ireland, Italy, Korea Republic, Malta, Portugal, Trinidad, U.S.A, Bangladesh, Egypt, India, Mongolia, Sri Lanka, Ukraine, Brazil, Dominican Republic, Jordan, Kazakhstan, and South Africa. Contrarily, the results show that foreign direct investments have statistically significant positive contributions to CO2 emissions in with lower income countries compared to the countries above, such as Ethiopia, Tanzania and Togo, Armenia, Ecuador, Gabon, Mauritius, Paraguay, Honduras, Morocco.