The nexus between foreign direct investment and environmental sustainability in North Africa
-
DOIhttp://dx.doi.org/10.21511/ee.09(1).2018.05
-
Article InfoVolume 9 2018, Issue #1, pp. 57-68
- 2266 Views
-
456 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This paper provides a study of the relationship between sustainable development and foreign direct investment (FDI) from an empirical point of view in the case of the North African countries during the period from 1985 to 2005. We use the cointegration test, the FMOLS (Fully Modified Ordinary Least Squares) model and the Granger causality test to examine this relationship. According to the empirical results, we confirm the existence of a cointegration relationship between the different series studied in this paper. Based on the cointegration test we can use the error correction model. Also, to test the effect of FDI on sustainable development in the North African countries, we make an estimate by FMOLS method. We found that the foreign direct investment has a positive impact on CO2 emissions. Also, the Granger Causality test confirms the presence of a bidirectional relationship between FDI and CO2 emissions (Carbon dioxide). That is to say, the FDI can cause CO2 emissions and CO2 emissions can cause FDI based on the Granger causality.
- Keywords
-
JEL Classification (Paper profile tab)Q56, Q43
-
References21
-
Tables9
-
Figures0
-
- Table 1: The different variables
- Table 2: The countries of North Africa
- Table 3: Descriptive statistics
- Table 4: The correlation matrix
- Table 5: The unit root test
- Table 6: The cointegration test of the impact of FDI on sustainable development for countries of North Africa
- Table 7: The ECM for variable LCO2
- Table 8: Estimation FMOLS for variable LCO2
- Table 9: The causality test for variable LCO2
-
- Al-Iriani, M. (2007). Foreign direct investment and economic growth in the GCC countries: A causality investigation using heterogeneous panel analysis. Topics in Middle Eastern and North African Economies, 9(1), 1˗31.
- Borenszteina, E., Gregoriob, J. De, & Leec, J.-W. (1998). How does foreign direct investment affect economic growth? Journal of International Economics, 45(1), 15˗135.
- Brock, W., & Taylor M. (2004). The green solow model (NBER Technical Working Paper, 10557).
- Chakraborty, C., & Nunnenkamp, P. (2006). Economic reforms, foreign direct investment and its economic effects in India. Germany: Kieler Arbeitspapiere.
- Choe, J. Il. (2003). Do Foreign Direct Investment and Gross Domestic Investment Promote Economic Growth? Review of Development Economics, 7(1), 44˗57.
- Chowdhury, A., & Mavrotas, G. (2006). FDI and Growth: What Causes What? World Economy, 29(1), 9˗19.
- Cole, M. A., & Elliott, R. J. (2005). FDI and the capital intensity of ‘dirty’ sectors: a missing piece of the pollution haven puzzle. Review of Development Economics, 9, 530-548.
- Cole, Matthew A., Robert J. R. Elliott, & Per G. Fredriksson (2006). Endogenous pollution havens: Does FDI influence environmental regulations? Scandinavian Journal of Economics,108, 157˗178.
- Davletshin, E., Kotenkova, S., & Vladimir, E. (2015), Quantitative and Qualitative Analysis of Foreign Direct Investments in Developed and Developing Countries. Procedia Economics and Finance, 32, 256-263.
- Grossman, G. M., Krueger, A. B. (1995). Economic growth and the environment. The Quarterly Journal of Economics, 110, 353-377.
- Harbaugh, W., Levinson, A., & Wilson, D. M. (2002). Reexamining the empirical evidence for an environmental Kuznets curve. Review of Economics and Statistics, 84, 541-551.
- Hartman, R., & Kwon, O–S. (2005). Sustainable growth and the environmental Kuznets curve. Journal of Economic Dynamics & Control, 29, 1701-1736.
- Hoffmann, R., Lee, C. G., Ramasamy, B., & Yeung, M. (2005). FDI and pollution: a Granger causality test using panel data. Journal of International Development, 17, 311-317.
- Iamsiraroj, S. (2016). The foreign direct investment–economic growth nexus. International Review of Economics & Finance, 42, 116-133.
- Jones, L. E., Manuelli, R. E. (1995). A positive model of growth and pollution controls (NBER, Working paper [5205]).
- Manuchehr, I., & Ericsson, J. (2001). On the causality between foreign direct investment and output: a comparative study. The International Trade Journal, 15(1), 1-26.
- Nair-Reichert, U., & Weinhold, D. (2001). Causality tests for cross-country panels: New look at FDI and economic growth in developing countries. Oxford Bulletin of Economics and Statistics 63(2), 153-171.
- Pegkas, P. (2015). The impact of FDI on economic growth in Eurozone countries. The Journal of Economic Asymmetries, 12(2), 124-132.
- Selden, T. M., & Song, D. (1994). Environmental quality and development: is there a Kuznets curve for air pollution emissions? Journal of Environmental Economics and Management, 27, 147-162.
- Shaikh, F. M. (2010). Causality Relationship Between Foreign Direct Investment, Trade And Economic Growth In Pakistan. In International Business Research (pp. 11-18). Harvard Business School.
- Stokey, N. L. (1998). Are there limits to growth? International Economic Review, 39(1), 1-31.