Environmental pollution of China to foreign investors: detrimental or beneficial?
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RESEARCH ARTICLE
Environmental pollution of China to foreign investors: detrimental or beneficial? Emma Serwaa Obobisa 1 & Haibo Chen 1 & Kofi Baah Boamah 2 & Emmanuel Caesar Ayamba 1 & Claudia Nyarko Mensah 2,3 & Nelson Amowine 2 Received: 5 June 2020 / Accepted: 4 November 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract This study investigates the dynamic linkage among foreign direct investment, energy consumption, and environmental pollution of China spanning from 1990 to 2014. Despite the extant literature on the FDI-energy-growth-environmental pollution nexus, most of the conclusion seems inconsistent. Hence, this study utilized recent econometric techniques such as the dynamic ordinary least square (DOLS), autoregressive distributed lag (ARDL) bounds test approach, Gregory and Hansen structural cointegration, and the bootstrap Granger causality. The study also disaggregated energy consumption into various sources to identify their respective distinct impact on the environment. Our study confirmed the presence of the EKC curve for China in a quadratic equation applying the DOLS. The result of the bootstrapped Granger causality confirmed the presence of a unidirectional Granger causality running from CO2 emission to economic growth and export; non-renewable energy to economic growth, export to economic growth, and renewable energy; and urbanization to economic growth. Moreover, our study recognized the presence of a bi-directional connection between FDI and economic growth. Our study highly recommends that China modify its energy mix by incorporating more renewable energy resources such as hydro, wind, geothermal. Additionally, the regulatory bodies should strictly implement improved energy efficiency in the various sectors that complement total proper urban land usage as the urban population to total population significantly impelled an upsurge in environmental deterioration in China. Keywords Carbon dioxide emission . Foreign direct investment . Energy consumption . Economic growth . Bootstrap causality . Cointegration . China
Introduction Decades of rapid economic growth and FDI inflow have significantly increased China’s energy use and environmental pollution (Wang et al. 2016). With GDP growing more than 10% on average over the last half-century, more foreign institutions have
been attracted to set up industries in China, which has further boosted trade among its international partners. China is currently the world’s second-largest FDI recipient after the United States, receiving 140 billion US dollar foreign investment in 2019 (UNCTAD 2020). FDI is believed to be one of the economic activities that are assumed to be linked to China’s economic
Responsible Editor: Nicholas Apergis * Haibo Chen [email protected]
Claudia Nyarko Mensah [email protected] Nelson Amowine [email protected]
Emma Serwaa Obobisa [email protected] Kofi Baah Boamah [email protected]
1
School of Finance and Economics, Jiangsu University, Zhenjiang 212013, People’s Republic of C
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