Reinvestigate the Effect of Foreign Direct Investment on Environmental Quality in the MENA Region: Is There Any Difference Using the Load Capacity Factor?

Hicham Ayad, Abdelhak Lefilef (), Atif Jahanger and Daniel Balsalobre-Lorente ()
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Abdelhak Lefilef: University Center of Abdelhafid Boussouf
Daniel Balsalobre-Lorente: University of Castilla-La Mancha

Journal of the Knowledge Economy, 2024, vol. 15, issue 3, No 174, 14810-14840

Abstract: Abstract This paper aims to re-examine the effect of foreign direct investment on environment quality using the load capacity factor in 16 Middle East and North African nations from 1990 to 2018. The study utilizes several econometric models to test linear and nonlinear effects and identify potential U- and inverted N-shaped relationships between foreign direct investments and environment quality. The analysis also examines the environmental Kuznets curve hypothesis by testing for U- and inverted N-shaped relationships between gross domestic product per capita and environment sustainability. The results indicate an inverted U-shaped relationship between foreign direct investment and environment quality. Furthermore, the cubic model results show an N-shaped relationship between gross domestic product per capita and environment quality, supporting the environmental Kuznets curve hypothesis. In contrast, no N-shaped relationship exists between foreign direct investment and environment quality. These results demonstrate the importance of economic growth and foreign direct investment in improving environmental conditions in the region through the necessity of attracting environmentally friendly investments.

Keywords: Load capacity factor; Foreign direct investment; Kuznets curve; MENA region (search for similar items in EconPapers)
JEL-codes: C23 O11 Q53 Q56 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13132-023-01629-7

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