Testing the Pollution Haven Hypothesis with the Role of Foreign Direct Investments and Total Energy Consumption

Vishal Dagar (), Farhan Ahmed, Farah Waheed, Štefan Bojnec, Muhammad Kamran Khan and Sana Shaikh
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Farhan Ahmed: Department of Economics and Management Sciences, NED University of Engineering and Technology, Karachi 75270, Pakistan
Farah Waheed: Management Studies Department, Bahria Business School, Bahria University, Islamabad 04408, Pakistan
Štefan Bojnec: Faculty of Management, University of Primorska, SI-6101 Koper-Capodistria, Slovenia
Muhammad Kamran Khan: Management Studies Department, Bahria Business School, Bahria University, Islamabad 04408, Pakistan
Sana Shaikh: Department of Management Sciences, SZABIST, Larkana 77150, Pakistan

Energies, 2022, vol. 15, issue 11, 1-23

Abstract: The main objective of this study was to examine the nonlinear relationship between environmental deterioration and foreign direct investment for subpanels based on the country’s income level. In this study, the model’s determinants were total consumption of energy and electricity consumption, the share of renewable energy, and economic growth. Due to the observation of cross-sectional dependence, utilization of cointegration tests and panel data unit root were incorporated, which confirmed a mixed integration order. For the compliance of long-run and short-run relationships among the variables, a pooled mean group estimator panel auto-regressive distributed lag approach was incorporated. The results of long-run development support the pollution haven hypothesis; hence, ecological footprint is increased by the activities related to foreign direct investments. The obtained findings depend on the different subpanels based on the income level of countries. For the assurance of economic development sustainability in the energy sector, along with the electrical energy sector, customized policymaking is suggested by this study based on the particulars of each subpanel.

Keywords: energy consumption; renewable energy; environmental degradation; foreign direct investments (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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