Does foreign direct investments impair the ecological footprint? New evidence from the panel quantile regression
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RESEARCH ARTICLE
Does foreign direct investments impair the ecological footprint? New evidence from the panel quantile regression Mohammad Ashraful Ferdous Chowdhury 1
&
Peal Ahamed Shanto 1 & Afsana Ahmed 1 & Rabeya Hossain Rumana 1
Received: 20 July 2020 / Accepted: 2 November 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract This study examines the impact of foreign direct investments on ecological footprint along with other explanatory variables of 92 countries from the year 2001 to 2016. Here, we applied the panel quantile regression model to meet the purpose of our study as it considers unobserved country heterogeneity, unlike other statistical methods. The study reveals that foreign direct investment has a positive relationship with the ecological footprint in each quantile except one, which proves the constancy of the pollution haven hypothesis. Moreover, we also tried to detect the impact of economic growth, manufacturing value-added, the percentage of world exports, and institutional quality on the ecological footprint in this study. The findings of this study also reveal that economic growth and manufacturing value-added are negatively associated with the ecological footprint. With respect to the percentage of world exports and institutional quality, we found a positive relationship with the ecological footprint. From the result of our study, different policy implications have been proposed for host countries and foreign investors on improving the economy through foreign direct investment with minimal ecological footprint. Keywords FDI . Ecological footprints . Panel quantile regression . Pollution haven hypothesis
Introduction In the contemporary world, foreign direct investment (FDI) is a frequently quoted economic instrument for the countries to confront the severe economic challenges (Charfeddine and Mrabet 2017). Almost every country of the globe tries to persuade a vast amount of foreign capital to their country for the extension of the economy (Solarin and Al-Mulali 2018). Countries that do not have enough capital, manufacturing skills deliver the highest effort to hold foreign companies for Responsible Editor: Nicholas Apergis * Mohammad Ashraful Ferdous Chowdhury [email protected]; [email protected] Peal Ahamed Shanto [email protected] Afsana Ahmed [email protected] Rabeya Hossain Rumana [email protected] 1
Department of Business Administration, Shahjalal University of Science and Technology, Sylhet, Bangladesh
investing in their businesses to achieve sustainable economic development (Wang and Chen 2014). Likewise, Deng and Xu (2015) stated that foreign direct investment has a positive influence on the host nation’s environment by benefiting the country with scale and technique effects. However, Liu and Wang (2017) argued that countries have to pay a high cost of environmental quality for the inflow of foreign direct investment and development, as the natural environment is used almost in every form of manufacture. Countries invite de
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