The relationship between foreign direct investment and carbon emissions in the BRICS (Brazil, Russian Federation, India, China, and South Africa) countries for 1992–2017 is investigated in this study. Biomass energy consumption and per capita income variables are also added to the model as additional determinants of pollution. To test the pollution haven hypothesis, panel fixed-effects and random-effects models are employed. The findings show that an N-shaped association exists between foreign direct investment and CO2 in BRICS countries. In addition, the empirical results also suggest that there is both an inverted-U and an inverted-N-shaped connection between income and pollution. Finally, the quadratic fixed-effects model results imply that biomass energy consumption has significant contribution to environmental degradation in these countries. When the results are interpreted, BRICS countries are suggested to provide more incentives to renewable energy sources and accelerate the development of the green energy system to attract clean resources and prevent environmental degradation.
AlbulescuC. T., TiwariA. K., YoonS. M., & KangS. H. (2019). FDI, income, and environmental pollution in Latin America: Replication and extension using panel quantiles regression analysis. Energy Economics, 84, 1–10. https://doi.org/10.1016/j.eneco.2019.104504
2.
AllardA., TakmanJ., UddinG. S., & AhmedA. (2017). The N-shaped environmental Kuznets curve: An empirical evaluation using a panel quantile regression approach. Environmental Science and Pollution Research, 25(6), 5848–5861. https://doi.org/10.1007/s11356-017-0907-0
3.
AsghariM. (2013). Does FDI promote MENA region’s environment quality? Pollution halo or pollution haven hypothesis. International Journal of Scientific Research in Environmental Sciences, 1(6), 92–100. http://doi.org/10.12983/ijsres-2013-p092-100
4.
BalatM., & BalatH. (2009). Recent trends in global production and utilization of bio-ethanol fuel. Applied Energy, 86(11), 2273–2282. https://doi.org/10.1016/j.apenergy.2009.03.015
5.
BaltagiB. H. (2005). Econometric analysis of panel data (3rd ed.). John Wiley and Sons, Ltd.
6.
BlancoL., GonzalezF., & RuizI. (2013). The impact of FDI on CO2 emissions in Latin America. Oxford Development Studies, 41(1), 104–121. http://doi.org/10.1080/13600818.2012.732055
7.
Carbon Brief. (2018). The carbon brief profile: Brazil. https://www.carbonbrief.org/the-carbon-brief-profile-brazil
8.
China Power. (2018). How is China managing its greenhouse gas emissions?https://chinapower.csis.org/china-greenhouse-gas-emissions/
9.
ChoiE., HeshmatiA., & ChoY. (2010). An empirical study of the relationships between CO emissions, economic growth and openness (IZA Discussion Paper, 5304, p. 27). Institute of Labor Economics (IZA). https://ideas.repec.org/p/iza/izadps/dp5304.html
10.
CopelandB. R., & TaylorM. S. (2004). Trade, growth, and the environment. Journal of Economic Literature, American Economic Association, 42(1), 7–71. https://doi.org/10.3386/w9823
11.
DeanJ. M., LovelyM. E., & WangH. (2009). Are foreign investors attracted to weak environmental regulations? Evaluating the evidence from China. Journal of Development Economics, 90(1), 1–13. https://doi.org/10.1016/j.jdeveco.2008.11.007
12.
Denmark in India. (2020). Biomass energy in India. https://indien.um.dk/en/innovation/sector-updates/renewable-energy/biomass-energy-in-india/
DoytchN., & UctumM. (2016). Globalization and the environmental impact of FDI. Economic System, 40(4), 582–594. https://doi.org/10.1016/j.ecosys.2016.02.005
15.
EskelandG. S., & HarrisonA. E. (2002). Moving to greener pastures? Multinationals and the pollution haven hypothesis (Working Paper No. 8888). National Bureau of Economic Research. http://www.nber.org/papers/w8888
16.
FieldC. B., CampbellJ. E., & LobellD. B. (2007). Biomass energy: The scale of the potential resource. Trends in Ecology and Evolution, 23(2), 65–72. https://doi.org/10.1016/j.tree.2007.12.001
17.
FryM. J., ClaessensS., BurridgeP., & BlanchetM. (1995). Foreign direct investment, other capital flows and current account deficit: What cause what? (Policy Research Working Paper, 1527, p. 20). The World Bank. https://ideas.repec.org/p/wbk/wbrwps/1527.html
18.
GreeneW. H. (2002). Econometric analysis(5th ed.). Pearson Education, Inc.
19.
GrossmanG. M., & KruegerA. B. (1991). Environmental impacts of a North American free trade agreement(Working Paper No. 3914). NBER. https://www.nber.org/papers/w3914.pdf
20.
HakroA. N., & GhumroA. A. (2007). Foreign direct investment, determinants and policy analysis: Case study of Pakistan. https://www.gla.ac.uk/media/media_210142_en.pdf
21.
HausmanJ. A. (1978). Specification tests in econometrics. Econometrica, 46(6), 1251–1271. https://doi.org/10.2307/1913827
22.
HoffmannR., LeeC. G., RamasamyB., & YeungM. (2005). FDI and pollution: A Granger causality test using panel data. Journal of International Development, 17(3), 311–317. https://doi.org/10.1002/jid.1196
23.
HsiaoC. (2003). Analysis of panel data (2nd ed.). Cambridge University Press.
24.
HuH., XieN., FangD., & ZhangX. (2018). The role of renewable energy consumption and commercial services trade in carbon dioxide reduction: Evidence from 25 developing countries. Applied Energy, 211, 1229–1244. https://doi.org/10.1016/j.apenergy.2017.12.019
25.
HuangY., ChenX., ZhuH., HuangC., & TianZ. (2019). The heterogeneous effects of FDI and foreign trade on CO2 emissions: Evidence from China. Mathematical Problems in Engineering, 2019, 1–14. https://doi.org/10.1155/2019/9612492
26.
IEA (International Energy Agency). (2010). World energy outlook 2010. OECD/IEA. https://www.oecd.org/berlin/46389140.pdf
27.
IRENA. (2017). REmap 2030 renewable energy prospects for the Russian Federation. https://www.irena.org/remap
28.
JunW., ZakariaM., ShahzadS. J. H., & MahmoodH. (2018). Effect of FDI on pollution in China: New insights based on Wavelet approach. Sustainability, 10(11), 1–20. https://doi.org/10.3390/su10113859
29.
KilicarslanZ., & DumrulY. (2017). Foreign direct investments and CO2 emissions relationship: The case of Turkey. Business and Economics Research Journal, 8(4), 647–660. https://doi.org/10.20409/berj.2017.73
30.
KivyiroP., & ArminenH. (2014). Carbon dioxide emissions, energy consumption, economic growth, and foreign direct investment: Causality analysis for Sub-Saharan Africa. Energy, 74, 595–606.
31.
KokR., & SimsekN. (2009). Panel data analysis. http://debis.deu.edu.tr/userweb//recep.kok/dosyalar/panel2.pdfhttps://www.educba.com/panel-data-analysis/
32.
KolstadC. D., & XingY. (1998). Do lax environmental regulations attract foreign investment?Departmental Working Papers, UC Santa Barbara. https://escholarship.org/uc/item/3268z4rx
33.
KurtU., KilicC., & OzekiciogluH. (2019). Effects of foreign direct investments on CO2 emissions: ARDL bounds test approach for Turkey. Journal of Selçuk University Social Sciences Vocational School, 22(1), 213–224.
34.
LiangF. (2014). Does foreign direct investment harm the host country’s environment? Evidence from China. Current Topics in Management, 17, 105–121.
35.
LiuQ., WangS., ZhangW., ZhanD., & LiJ. (2018). Does foreign direct investment affect environmental pollution in China’s Cities? A spatial econometric perspective. The Science of the Total Environment, 613–614, 521–529. https://doi.org/10.1016/j.scitotenv.2017.09.110
36.
MertM., & CaglarA. E. (2020). Testing pollution haven and pollution halo hypotheses for Turkey: A new perspective. Environmental Science and Pollution Research, 27(26), 32933–32943. https://doi.org/10.1007/s11356-020-09469-7
37.
Ministry of Foreign Affairs. (2018). Final energy report South Africa. https://www.rvo.nl/sites/default/files/2019/01/Final-Energy-report-South-Africa.pdf
38.
OmriA., NguyenD. K., & RaultC. (2014). Causal interactions between CO2 emissions, FDI, and economic growth: Evidence from dynamic simultaneous-equation models. Economic Modelling, 42, 382–389. https://doi.org/10.1016/j.econmod.2014.07.026
39.
PanayotouT. (1993). Empirical tests and policy analysis of environmental degradation at different stages of economic development(ILO Working Papers WP238). International Labour Organization.
40.
PaoH.-T., & TsaiC. M. (2011). Multivariate Granger causality between CO2 emissions, energy consumption, FDI (foreign direct investment) and GDP (gross domestic product): Evidence from a panel of BRIC (Brazil, Russian Federation, India, and China) countries. Energy, 36(1), 685–693. https://doi.org/10.1016/j.energy.2010.09.041
41.
PazienzaP. (2015). The Relationship between CO2 and foreign direct investment in the agriculture and fishing sector of OECD countries: Evidence and policy considerations. Intellectual Economics, 9(1), 55–66. https://doi.org/10.1016/j.intele.2015.08.001
42.
PetersG. P., & HertwichE. G. (2008). CO2 embodied in international trade with implications for global climate policy. Environmental Science & Technology, 42(5), 1401–1407. https://doi.org/10.1021/es072023k
43.
PetersG. P., MinxJ. C., WeberC. L., & EdenhoferO. (2011). Growth in emission transfers via international trade from 1990 to 2008. Proceedings of the National Academy of Sciences of USA, 108(21), 8903–8908. https://doi.org/10.1073/pnas.1006388108
44.
PethigR. (1976). Pollution, welfare, and environmental policy in the theory of comparative advantage. Journal of Environmental Economics and Management, 2(3), 160–169.
45.
RibeiroM. C. P., NadalC. P., da Rocha JuniorW. F., de Sousa FragosoR. M., & LindinoC. A. (2020). Institutional and legal framework of the Brazilian energy market: Biomass as a sustainable alternative for Brazilian agribusiness. Sustainability, 12(4), 1–10. https://doi.org/10.3390/su12041554
46.
SapkotaP., & BastolaU. (2017). Foreign direct investment, income, and environmental pollution in developing countries: Panel data analysis of Latin America. Energy Economics, 64, 206–212. https://doi.org/10.1016/j.eneco.2017.04.001
47.
ShahbazM., Balsalobre-LorenteD., & SinhaA. (2019). Foreign direct investment-CO2 emissions nexus in Middle East and North African countries: Importance of biomass energy consumption. Journal of Cleaner Production, 217, 603–614. https://doi.org/10.1016/j.jclepro.2019.01.282
48.
SharifA., Baris-TuzemenO., UzunerG., OzturkI., & SinhaA. (2020). Revisiting the role of renewable and non-renewable energy consumption on Turkey’s ecological footprint: Evidence from quantile ARDL approach. Sustainable Cities and Society, 57, Article 102138. https://doi.org/10.1016/j.scs.2020.102138
49.
SinhaA., ShahbazM., & BalsalobreD. (2017). Exploring the relationship between energy usage segregation and environmental degradation in N-11 countries. Journal of Cleaner Production, 168, 1217–1229. https://doi.org/10.1016/j.jclepro.2017.09.071
50.
SolarinS. A., Al-MulaliU., MusahI., & OzturkI. (2017). Investigating the pollution haven hypothesis in Ghana: An empirical investigation. Energy, 124, 706–719. https://doi.org/10.1016/j.energy.2017.02.089
51.
SternD. I. (2004). The rise and fall of the environmental Kuznets curve. World Development, 32(8), 1419–1439. https://doi.org/10.1016/j.worlddev.2004.03.004
52.
SulemanaI., JamesH. S., & RikoonJ. S. (2017). Environmental Kuznets curves for air pollution in African and developed countries: Exploring turning point incomes and the role of democracy. Journal of Environmental Economics and Policy, 6(2), 134–152. https://doi.org/10.1080/21606544.2016.1231635
53.
SungB., SongW. Y., & ParkS. D. (2017). How foreign direct investment affects CO2 emission levels in the Chinese manufacturing industry: Evidence from panel data. Economic System, 42(2), 320–331. https://doi.org/10.1016/j.ecosys.2017.06.002
54.
TangC. F., & TanB. W. (2015). The impact of energy consumption, income and foreign direct investment on carbon dioxide emissions in Vietnam. Energy, 79, 447–454. https://doi.org/10.1016/j.energy.2014.11.033
55.
ToA. H., HaD. T., NguyenH. M., & VoD. H. (2019). The impact of foreign direct investment on environment degradation: Evidence from emerging markets in Asia. International Journal of Environmental Research and Public Health, 16(9), 1–24. https://doi.org/10.3390/ijerph16091636
56.
UNCTAD. (2019). Trade and development report 2019: Financing a global green new deal. United Nations Publications. https://unctad.org/en/PublicationsLibrary/tdr2019_en.pdf
57.
UNCTAD. (2020). World investment report 2020: International production beyond the pandemic. United Nations Publications. https://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2769
58.
World Bank. (1993). Global economic prospects and the developing countries (1st ed.). The World Bank.
59.
Yerdelen-TatogluF. (2013). Panel Veri Ekonometrisi (Econometrics of panel data) (2nd ed.). Beta.
60.
YoshidaY., DowakiK., MatsumuraY., MatsuhashiR., LiD., IshitaniH., & KomiyamaH. (2003). Comprehensive comparison of efficiency and CO2 emissions between biomass energy conversion technologies—Position of supercritical water gasification in biomass technologies. Biomass and Bioenergy, 25(3), 257–272. https://doi.org/10.1016/S0961-9534(03)00016-3
61.
ZharskyL. (1999, January 28–29). Havens, halos and spaghetti: Untangling the evidence about foreign direct investment and the environment [Paper Presentation]. Conference on Foreign Direct Investment and the Environment, Hague, The Netherlands. https://nautilus.org/napsnet/napsnet-special-reports/havens-halos-and-spaghetti-untangling-the-evidence-about-the-relationship-between-foreign-investment-and-the-environment/?view=pdf
62.
ZhouZ. (2019). The underground economy and carbon dioxide (CO2) emissions in China. Sustainability, 11(10), 1–20. https://doi.org/10.3390/su11102802
