ABSTRACT
The Belt and Road Initiative (BRI), spearheaded by China, is anticipated to bolster trade, investment, and economic growth among participating countries to advance the United Nations' Sustainable Development Goal 7 through international trade. Within this context, renewable energy has emerged as a promising avenue to address environmental degradation and foster sustainable development. However, the impact of BRI's trade volume on renewable energy development and adoption in these nations remains unresolved. To address this, our study examines the influence of trade openness, foreign direct investment, economic growth, and oil prices on renewable energy consumption in 94 BRI countries with varying income levels from 2000 to 2019. Employing panel data analysis, including fixed effects (FE), random effects (RE), and the system generalised method of moments (GMM), we present findings across income groups: i) Trade openness exhibits a positive effect on renewable energy consumption in high-income and upper-middle-income countries; ii) In contrast, it diminishes renewable energy consumption in lower-middle-income countries; iii) Trade openness demonstrates insignificant effects on renewable energy consumption in low-income countries; iv) On the panel level, trade openness significantly and positively impacts renewable energy consumption. Our research underscores the significance of trade openness as a crucial instrument for advancing renewable energy development in high-income BRI countries, thereby fostering environmental sustainability. Policy interventions targeting renewable energy hold promise for enhancing environmental quality in low-income countries.
ABSTRACT
The impact of foreign direct investment (FDI) on environmental quality has been discussed in the environmental economics literature over the last decades. Within this scope, the pollution haven hypothesis (PHH) postulates that FDI inflows can cause environmental degradation in developing countries. Using data over the period 1993-2018 for 10 developing countries with current account deficits, this paper aims to test the validity of the PHH. Therefore, the paper examines whether or not developing countries face off a trade-off between financing current account deficits and environmental deterioration. The paper employs panel data methods that consider cross-sectional dependence. The empirical findings show that foreign direct investment inflows have no impact on environment, meaning the PHH does not dominate for these countries. Hence, the findings indicate that there is no trade-off between financing current account deficits and environmental deterioration.
Subject(s)
Carbon Dioxide , Economic Development , Carbon Dioxide/analysis , Cross-Sectional Studies , Environmental Pollution/analysis , Internationality , InvestmentsABSTRACT
The pollution haven hypo thesis (PHH) postulates that foreign direct investment (FDI) inflows can increase environmental deterioration in developing countries as multinational firms tend to transfer their dirty industries to these countries. Turkey, as a developing economy, has witnessed intense FDI inflows over the last decades. Within this scope, the goal of this paper is to examine whether the pollution haven hypothesis (PHH) prevails in Turkey within the scope of the environmental Kuznets curve (EKC) hypothesis over the period 1970-2016. To that end, the paper employs unit root and cointegration methods based on the nonlinear smooth transition models. The empirical findings of the paper indicate that both hypotheses are valid in Turkey. The findings also imply that environmental quality in Turkey is negatively related to electricity production from renewable energy sources.