FDI and Environmental Sustainability Nexus: Testing the Pollution Haven Hypothesis in the Presence of Regulatory Quality

Ibrahim Nandom Yakubu and Alhassan Musah

MPRA Paper from University Library of Munich, Germany

Abstract: In this study, we examine the relationship between foreign direct investment (FDI) and environmental pollution within the context of the pollution haven hypothesis (PHH) in Ghana. We also investigate the role of regulatory quality in the FDI-pollution linkage. The study employs quarterly data spanning the period 2000Q1-2017Q4 and applies the fully modified least squares (FMOLS) technique. The empirical results show that FDI inflows significantly and positively drive environmental pollution. This result holds in the presence of regulatory quality. Accordingly, we confirm the validity of the pollution haven hypothesis in Ghana. The study also finds that industrialization increases pollution given its significant positive relationship with ecological footprint. We discuss relevant policy implications.

Keywords: FDI; Pollution haven hypothesis; Ecological footprint; FMOLS; Ghana (search for similar items in EconPapers)
JEL-codes: F2 F20 Q5 Q58 (search for similar items in EconPapers)
Date: 2022-11-01
New Economics Papers: this item is included in nep-afr, nep-ene, nep-env and nep-int
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Published in International Journal of Advanced Research in Economics and Finance 3.4(2022): pp. 287-295

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:115410

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