From foreign direct investment to environmental regulations: Does a feedback effect ever exist?

This study revisits the feedback effect from foreign direct investments (FDI) on environmental regulations under the presence of the host country's political structure. Such a relationship may encounter the endogeneity problem due to the omitted variable bias and reverse causality. As such, the two-step system generalized method of moments is employed. Using data from 21 OECD countries from 1990 to 2019, we confirm that FDI flows influence environmental regulations, but such an effect is conditional on the host country's political constraints. Specifically, FDI increases (decreases) the stringency of environmental regulations if domestic political constraints are sufficiently high (low). Understanding the mechanisms of how FDI flows can affect environmental regulations allows countries to revise their policies to attract more FDI flows to support economic growth while simultaneously minimising their negative effects on the environment.

The asymmetric effects of institutional quality on financial inclusion in the Asia-pacific region.

Financial inclusions are generally considered an effective mechanism to support sustainable economic growth in emerging markets. While the symmetric effects of institutional quality on financial inclusion have been widely investigated, their asymmetric effects have largely been ignored in existing literature, particularly for emerging markets. In this paper, we estimate the index of financial inclusion for 19 countries in the Asia-Pacific region from 2004 to 2020. The institutional quality is proxied by five indicators, including (i) business sophistication, (ii) regulatory quality, (iii) investment freedom, (iv) government effectiveness, and (v) the rule of law. The advanced panel smooth transition technique ensures that the asymmetric effects of institutional quality on financial inclusion are substantiated depending on the income level across countries in the sample. We find that institutional quality's effects on financial inclusion are asymmetric depending on the income level. Our findings indicate that middle-income countries such as Vietnam and other emerging nations in the Asia-Pacific region mostly benefit from the positive effects of institutional reform to ensure more inclusive economic growth in the future.