Foreign Direct Investment and Environmental Degradation in Algeria: An ARDL Approach

Amine Tammar ()
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Amine Tammar: University Blida2, Algeria

Management and Economics Review, 2025, vol. 10, issue 2, 352-364

Abstract: This study investigates the relationship between foreign direct investment (FDI) and environmental degradation in Algeria from 1990 to 2022. Employing an Autoregressive Distributed Lag (ARDL) approach, the research analyses the short- and long-run impacts of FDI, GDP growth, fossil fuel consumption, and manufacturing emissions on CO2 emissions per capita. The ARDL model reveals a weak positive short-run relationship between FDI and CO2 emissions, consistent with the pollution haven hypothesis. However, in the long run, no significant relationship exists. GDP growth significantly impacts CO2 emissions, aligning with the Environmental Kuznets Curve. Unexpectedly, manufacturing emissions show an inverse relationship with overall pollution, possibly due to Algeria’s less industrialised, rent-based economy. The study concludes that Algeria needs stronger institutional frameworks and sustainable policies to mitigate FDI’s environmental impact.

Keywords: foreign direct investment; environmental degradation; Algeria; ARDL; CO2 emissions; Pollution Haven Hypothesis. (search for similar items in EconPapers)
JEL-codes: C22 F18 F21 Q55 Q56 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:rom:merase:v:10:y:2025:i:2:p:352-364

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