Exploring the Relationship Between Democracy and the Environment: The Moderating Role of FDI

João Bento () and Miguel M. Torres ()
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João Bento: Polytechnical Institute of Lisbon
Miguel M. Torres: Kent Business School, University of Kent

A chapter in Global Perspectives on Climate Change, Inequality, and Multinational Corporations, 2025, pp 283-308 from Springer

Abstract: Abstract This chapter investigates the environmental effects of FDI and democracy using a panel dataset of 160 countries for the period from 1980 to 2021. It also examines the marginal effects of FDI at the mean and various percentile values of the composite democracy indicator. The findings demonstrate that FDI significantly reduces environmental emissions as countries increase their level of democracy. Evidence shows that the interaction between FDI and democracy leads to the pollution halo hypothesis. The mitigation effect is larger in countries that present higher levels of democracy and attract more FDI.

Keywords: FDI; Democracy; GHG emissions; Climate crisis; Panel data study (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:csrchp:978-3-031-80797-8_12

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DOI: 10.1007/978-3-031-80797-8_12

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