 Operational behaviours of multinational corporations, renewable energy transition, and environmental sustainability in Africa: Does the level of natural resource rents matter?Mehmet Balcilar, Ojonugwa Usman () and George N. Ike Resources Policy, 2023, vol. 81, issue C Abstract: The pollution haven hypothesis postulates a transfer of unsustainable production practices by multinational corporations (MNCs) to their operational bases in developing economies with lax environmental regulations. However, little is known about the role of natural resource rents in this relationship. To this end, the study empirically investigates the interaction effects of the operational behaviours of multinational corporations (MNCs) through foreign direct investment (FDI) and natural resource rents on environmental sustainability in 34 African countries over the period 1990 to 2017. Identifying two main pathways through which this can occur, we specify two models with CO2 emissions and renewable energy as separate response variables. Employing both the System Generalized Method of Moments (SYS-GMM) and Method of Moments Quantile regression (MM-QR) estimation techniques, the empirical results suggest that natural resource rents play a vital moderating role in determining how the operational behaviours of MNCs affect environmental sustainability. The interaction term of foreign investment and natural resource rents correlates negatively and positively with environmental pollution and renewable energy transition respectively. This suggests that at a certain level of natural resource rents, the strength of the operational behaviours of MNCs to increase environmental degradation is reduced. Furthermore, in countries with lower levels of natural resource rents, an increase in foreign investment deteriorates the environment, while in countries with lower levels of foreign investment, an increase in resource rents degrades the environment. The dynamics follow the reverse direction when renewable energy is the response variable. These findings, therefore, have policy implications for achieving Africa's goal of carbon neutrality. Keywords: Foreign investment; Renewable energy transition; Natural resources rents; Method of moments-quantile regression; African countries (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:81:y:2023:i:c:s0301420723000521 DOI: 10.1016/j.resourpol.2023.103344 Access Statistics for this article Resources Policy is currently edited by R. G. Eggert More articles in Resources Policy from Elsevier |
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