Does foreign direct investment harm the environment in developing countries? Dynamic panel analysis of Latin American countries

This article sets out to study the FDI-environment nexus within a dynamic panel data framework. To that end, the pooled mean group (PMG) method of Pesaran et al. (1999) is used to assess the impact of FDI on CO2 emissions, controlling for income and energy consumption, using a panel of 17 Latin Amer...

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Bibliographic Details
Published inEconomies Vol. 5; no. 4; pp. 1 - 8
Main Authors Baek, Jungho, Choi, Yoon Jung, Wong, Wing-Keung
Format Journal Article
LanguageEnglish
Published Basel MDPI 01.12.2017
MDPI AG
Subjects
Air pollution
Carbon dioxide
CO2 emissions
Developing countries
Economic models
Emissions
Energy consumption
Environmental impact
FDI
Foreign investment
Latin America
LDCs
panel analysis
PMG
Splitting
Latin America
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Summary:This article sets out to study the FDI-environment nexus within a dynamic panel data framework. To that end, the pooled mean group (PMG) method of Pesaran et al. (1999) is used to assess the impact of FDI on CO2 emissions, controlling for income and energy consumption, using a panel of 17 Latin American countries. Our results using the full sample show that FDI increases CO2 emissions, confirming the pollution haven hypothesis. But when splitting the data into different income groups, FDI inflows only in high-income countries increase CO2 emissions. In addition, CO2 emissions with growth tend to increase monotonically within the full sample and middle-income countries. Finally, energy consumption is found to increase CO2 emissions in all cases: the full sample, high-, middle- and low-income countries.
ISSN:2227-7099
2227-7099
DOI:10.3390/economies5040039