Akademik Veri Yönetim Sistemi
Journal of Academic Researches and Studies, cilt.17, sa.32, ss.134-149, 2025 (TRDizin)
Purpose: The purpose of this study is to investigate how foreign direct investment (FDI) affects the environmental quality of the Fragile Five countries, with a particular emphasis on how it may transfer ecologically damaging sectors to host countries. The link between FDI inflow, CO2 emissions, and temperature rise in the selected countries between 1970 and 2021 is specifically examined.
Design/methodology: The Panel Fourier
Granger Causality Test is used in the study to examine the causative
relationships among temperature rise, CO2 emissions, and FDI. In order to
effectively approximate the structural breaks in the series, Bahmani-Oskooee et
al. (2014) Panel Unit Root Test with Sharp and Smooth Breaks was used.
Additionally, the Pollution Haven Hypothesis (PHH) is tested for the selected
countries.
Findings: In the Fragile Five countries,
the findings show a causal relationship between CO2 emissions and temperature
rise, as well as between FDI inflow and CO2 emissions. PHH for these countries
is supported by these findings, which also imply that FDI inflows worsen
environmental deterioration and contribute to warming.
Originality/value: This study contributes
to the body of literature by offering empirical proof of the long-term
environmental effects of FDI inflows into the Fragile Five countries.
Additionally, the PHH is tested for selected countries and one-way causality
from FDI to CO2 emission reveals that PHH is valid for selected countries.