Abstract
This study investigates the spatial influence and spillover effects of foreign direct investment (FDI) on environmental pollution (EP) by using panel spatial data in 1970–2016 for 12 selected Arab countries. It employs the STochastic Impacts by Regression on Population, Affluence, and Technology (STIRPAT) model. The spatial econometric approach is applied to examine the validity of the pollution haven hypothesis (PHH) and the pollution halo hypothesis (P-HH) (from now on, we will use the acronyms PHH and P-HH to denote the pollution haven hypothesis and pollution halo hypothesis, respectively). The Sustainable Development Goals (SDGs) are linked to the study results with a focus on cleaner production practices. The global Moran’s I, local Moran’s I, and Lagrange multiplier (LM) tests are used to ascertain the existence of spatial autocorrelation (SAR) and determine its trend. We also apply the spatial lag model (SLM), the spatial error model (SEM), and the spatial Durbin model (SDM) to achieve the study objectives. Data are analyzed by using the SDM on the basis of the results of the Wald and likelihood ratio tests. The results of the LM and global and local Moran’s I tests confirm the existence of SAR. The SDM results reveal that a slight increase in CO2 is an influence of the FDI on EP. Findings support the existence of PHH in the Arab countries. The direct effect of the FDI is increased CO2 and environmental degradation, and the spatial spillover effects are statistically insignificant. This study suggests a set of policies for managing and directing FDI toward clean technology-based industries and reduced CO2 emissions. Such policies may contribute to the achievement of some SDGs and balancing economic development and environmental sustainability according to the cleaner production practice perspective in the Arab countries and other states with similar conditions.
Similar content being viewed by others
Notes
Bahrain, Iraq, Jordan, Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi, Syria, the UAE, and Yemen
Emissions Database for Global Atmospheric Research
Economic growth, energy consumption, industrial structure, population, domestic capital stock, and environmental regulation
The exploratory spatial data analysis (ESDA) technique
For more details of these studies, see Table 10 in the Appendix.
For more details of these studies, see Table 11 in the Appendix.
For more details of these studies, see Table 12 in the Appendix.
The coefficients ρ and λ of queen contiguity spatial weights are insignificant, so they are not presented in this paper due to the limited space available for publication. However, they are available upon request.
The results of the SLM, SEM, and SDM with all spatial weights are not presented in this paper due to the limited space available for publication. However, they are available upon request.
References
Abdouli M, Kamoun O, Hamdi B (2018) The impact of economic growth, population density, and FDI inflows on CO2 emissions in BRICTS countries: does the Kuznets curve exist? Empir Econ 54:1717–1742. https://doi.org/10.1007/s00181-017-1263-0
Aliyu AJ, Ismail NW (2015) Foreign direct investment and pollution haven: does energy consumption matter in African countries. J Econ Manag 9(S):21–39 https://www.semanticscholar.org/paper/Foreign-Direct-Investment-and-Pollution-Haven-%3A-in-Aliyu-Ismail/e06ba8691f2f0a399d7d814bc405a5ab6872e55c
Al-Mulalia U, Tang C (2013) Investigating the validity of pollution haven hypothesis in the gulf cooperation council (GCC) countries. Energy Policy 60:813–819. https://doi.org/10.1016/j.enpol.2013.05.055
Anselin L (1995) Local indicators of spatial association-LISA. Geogr Anal 2:93–115
Anselin L (1996) The Moran scatterplot as an ESDA tool to assess local instability in spatial association. In: Fischer M, Scholten H, Unwin D (eds) Spatial analytical perspectives on GIS. Taylor and Francis, London, pp 111–125
Anselin L (2002) Under the hood issues in the specification and interpretation of spatial regression models. Agric Econ 27(3):247–267. https://doi.org/10.1111/j.1574-0862.2002.tb00120.x
Anselin L (2005) Exploring spatial data with GeoDa: a workbook. Center for Spatially Integrated Social Science.
Asghari M (2013) Does FDI promote MENA region’s environment quality? Pollution Halo or pollution haven hypothesis. Inter J Sci Res Environ Sci 1(6):92–100. https://doi.org/10.12983/ijsres-2013-p092-100
Bakhsh K, Rose S, Ali MF, Ahmad N, Shahbaz M (2017) Economic growth, CO2 emissions, renewable waste, and FDI relation in Pakistan: new evidence from 3SLS. J Environ Manag 196:627–632. https://doi.org/10.1016/j.jenvman.2017.03.029
Baltagi H B (2005) Econometric analysis of panel data. In: Chapter (1) introduction, 3rd edn. John Wiley & Sons ltd, pp 4-7
Baumol WJ, Baumol WJ, Oates WE, Bawa VS, Bawa WS, Bradford DF (1988) The theory of environmental policy. Cambridge University Press
Bin L, Wu S (2017) Effects of local and civil environmental regulation on green total factor productivity in China: a spatial Durbin econometric analysis. J Clea Prod 153:342–353. https://doi.org/10.1016/j.jclepro.2016.10.042
Cai X, Che X, Zhu B, Zhao J, Xie R (2018) Will developing countries become pollution havens for developed countries? An empirical investigation in the Belt and Road. J Clea Prod 198:624–632. https://doi.org/10.1016/j.jclepro.2018.06.291
Charfeddine L, Mrabet Z (2017) The impact of economic development and social-political factors on ecological footprint: a panel data analysis for 15 MENA countries. Renew Sust Energ Rev 76:138–154. https://doi.org/10.1016/j.rser.2017.03.031
Chikaraishi M, Fujiwara A, Kaneko S, Phetkeo Poumanyvong P, Komatsu S, Andrey Kalugin (2015). The moderating effects of urbanization on carbon dioxide emissions: A latent class modeling approach.Technological Forecasting and Social Change 90( A):302-317. https://doi.org/10.1016/j.techfore.2013.12.025
Cole MA (2004) Trade, the pollution haven hypothesis and the environmental Kuznets curve: examining the linkages. Ecol Econ 48:71–78. https://doi.org/10.1016/j.ecolecon.2003.09.007
Copeland B, Taylor MS (1994) North-South trade and the environment. Q J Econ 109(3):755–787. https://doi.org/10.2307/2118421
Dietz T, Rosa E A (1997). Effects of population and affluence on CO2 emissions. Proceedings of the National Academy of Sciences USA 94 (1):175–179. https://doi.org/10.1073/pnas.94.1.175
Dong K, Hochman G, Kong X, Sun R, Wang Z (2019) Spatial econometric analysis of China’s PM10 pollution and its influential factors: evidence from the provincial level. Ecol Indic 96:317–328. https://doi.org/10.1016/j.ecolind.2018.09.014
Du Y, Wan Q, Liu H, Liu H, Kapsar K, Peng J (2019) How does urbanization influence PM2.5 concentrations? Perspective of spillover effect of multi-dimensional urbanization impact. J Clea Prod 220:974–983. https://doi.org/10.1016/j.jclepro.2019.02.222
Elhorst JP (2003) Specification and estimation of spatial panel data models. Int Regional Sci Rev 26:244–268. https://doi.org/10.1177/0160017603253791
Elhorst JP (2010) Applied spatial regression: raising the bar. J Spatial Econ Anal 5(1):9–28. https://doi.org/10.1080/17421770903541772
Elhorst JP (2014) Spatial econometrics: from cross-sectional data to spatial panels. Springer, New York NY
Emissions Database for Global Atmospheric Research , EDGARv4.3.2_FT2016 dataset (2017) https://edgar.jrc.ec.europa.eu/overview.php?v=CO2andGHG1970-2016&sort=des8 . Accessed 3 March 2018
Goodchild M F (1986) Spatial autocorrelation. Geo Books, 47. Norwich
Gorus M S, Aslan M (2019). Impacts of economic indicators on environmental degradation: Evidence from MENA countries.Renewable and Sustainable Energy Reviews 103:259-268. https://doi.org/10.1016/j.rser.2018.12.042
Grossman G M, Krueger AB (1991) Environmental impacts of a North American Free Trade Agreement. NBER Working Paper No. 3914, MIT Press: Cambridge, MA, USA pp. 1–57. https://doi.org/10.3386/w3914
Gujarati D N (2004) Basic econometrics. In: Chapter (16), panel data regression models, 4th edn. The McGraw−Hill Companies, pp 637–638
Hafeez M, Chunhui Y, Strohmaier D, Ahmed M, Jie L (2018) Does finance affect environmental degradation: evidence from One Belt and One Road Initiative region? Environ Sci Pollut Res 25:9579–9592. https://doi.org/10.1007/s11356-018-1317-7
Hammamet (2013) Overview of CO2 emissions in the Arab region: national versus sectoral emissions. ESCWA, Economic Development and Globalization Division https://www.unece.org/fileadmin/DAM/trans/doc/themes/ForFITS/ESCWA%20-%20Overview%20of%20CO2%20emissions%20in%20the%20Arab%20Region.pdf.
Hansen B E (2020) Econometrics. In: Chapter (17) panel data. University of Wisconsin, Department of Economics, pp 586. https://www.ssc.wisc.edu/~bhansen/econometrics/Econometrics.pdf
Hao Y, Peng H (2017) On the convergence in China’s provincial per capita energy consumption: new evidence from a spatial econometric analysis. Energy Econ 68:31–43
Jiang L, Zhuo HF, Bai L, Zhuo P (2018) Does foreign direct investment drive environmental degradation in China? An empirical study based on air quality index from a spatial perspective. J Clea Produ 176:864–872. https://doi.org/10.1016/j.jclepro.2017.12.048
Keller W (2004) International technology diffusion. J Econ Lit 42(3):752–782. https://doi.org/10.1257/0022051042177685
Khan AQ, Saleem N, Fatima ST (2018) Financial development, income inequality, and CO2 emissions in Asian countries using STIRPAT model. Environ Sci Pollut Res Int 25(7):1–12. https://doi.org/10.1007/s11356-017-0719-2
Koçak E, Ulucak ZS (2019) The effect of energy R&D expenditures on CO2 emission reduction: estimation of the STIRPAT model for OECD countries. Environ Sci Pollut Res Int 26:14328–14338. https://doi.org/10.1007/s11356-019-04712-2
Lee JW (2013) The contribution of foreign direct investment to clean energy use, carbon emissions, and economic growth. Energy Policy 55:483–489. https://doi.org/10.1016/j.enpol.2012.12.039
LeSage J, Pace R K (2009) Introduction to spatial regressions. Chapman and Hall CRC
Lin S, Wang S, Marinova D, Zhao D, Hong J (2017) Impacts of urbanization and real economic development on CO2 emissions in non-high-income countries: empirical research based on the extended STIRPAT model. J Clean Prod 166:952–966. https://doi.org/10.1016/j.jclepro.2017.08.107
Liu H, Kim H (2018) Ecological footprint, foreign direct investment, and gross domestic production: evidence of Belt & Road Initiative countries. J Sustai 10(10):3527. https://doi.org/10.3390/su10103527
Liu K, Lin B (2019) Research on influencing factors of environmental pollution in China: a spatial econometric analysis. J Clean Prod 206:356–364. https://doi.org/10.1016/j.jclepro.2018.09.194
Liu QQ, Wang SJ, Zhang WZ, Zhan DS, Li JM (2018) Does foreign direct investment affect environmental pollution in China’s cities? A spatial econometric perspective. Sci Total Environ 613:521–529. https://doi.org/10.1016/j.scitotenv.2017.09.110
Liu Q, Wang Q (2017) How China achieved its 11th Five-Year Plan emissions reduction target: a structural decomposition analysis of industrial SO2 and chemical oxygen demand. Sci Total Environ 574:1104–1116
Liu Y, Gao Y, Hao Y (2019) Gospel or disaster? An empirical study on the environmental influences of domestic investment in China. J Clean Prod 218:930–942. https://doi.org/10.1016/j.jclepro.2019.01.333
Liu YM, Hao Y, Gao Y (2017a) The environmental consequences of domestic and foreign investment: evidence from China. Energy Policy 108:271–280. https://doi.org/10.1016/j.enpol.2017.05.055
Liu Y, Xiao H, Lv Y, Zhang N (2017b) The effect of new-type urbanization on energy consumption in China: a spatial econometric analysis. J Clean Prod 163:S299–S305. https://doi.org/10.1016/j.jclepro.2015.10.044
Mert M, Bölük G, Çağlar AE (2019) Interrelationships among foreign direct investments, renewable energy, and CO2 emissions for different European country groups: a panel ARDL approach. Environ Sci Pollut Res 26:21495–21510. https://doi.org/10.1007/s11356-019-05415-4
Nadeem AM, Ali T, Khan MTI, Guo Z (2020) Relationship between inward FDI and environmental degradation for Pakistan: an exploration of pollution haven hypothesis through ARDL approach. Environ Sci Pollut Res:1–19. https://doi.org/10.1007/s11356-020-08083-x
OAPEC’s Data Bank (2018). http://oapecdbsys.oapecorg.org:8080/apex/f?p=101:23:::NO:::.
Pao HT, Tsai CT (2011) Multivariate Granger causality between CO2 emissions, energy consumption, FDI (foreign direct investment) and GDP (gross domestic product): evidence from a panel of BRIC (Brazil, Russian Federation, India, and China) countries. J Energy 36:685–693. https://doi.org/10.1016/j.energy.2010.09.041
Pazienza P (2015) The relationship between CO2 and foreign direct investment in the agriculture and fishing sector of OECD countries: evidence and policy considerations. Intellect Econ 9(1):55–66. https://doi.org/10.1016/j.intele.2015.08.001
Pazienza P (2019) The impact of FDI in the OECD manufacturing sector on CO2 emission: evidence and policy issues. Environ Impact Assess Rev 77:60–68. https://doi.org/10.1016/j.eiar.2019.04.002
Pesaran HM (2015) Time series and panel data econometrics. In: Chapter (26) panel data models with strictly exogenous regressors,1st edn. Oxford University Press, pp 633
Rafindadi AA, Muye IM, Kaita RA (2018) The effects of FDI and energy consumption on environmental pollution in predominantly resource-based economies of the GCC. Susta Energy Techno and Assessments 25:126–137. https://doi.org/10.1016/j.seta.2017.12.008
Rasool Y, Zaidi SAH, Zafar MW (2019) Determinants of carbon emissions in Pakistan’s transport sector. Environ Sci Pollut Res Int 26:22907–22921. https://doi.org/10.1007/s11356-019-05504-4
Rauf A, Liu X, Amin W, Ozturk I, Rehman O, Sarwar S (2018) Energy and ecological sustainability: challenges and panoramas in belt and road initiative countries. Sustain 10:2743. https://doi.org/10.3390/su10082743
Reinhard S, Linderhof V (2013) Using spatial econometrics in impact assessment. Spatial analysis of rural development. Working paper, Package No. 4, D4.5. http://project2.zalf.de/spard/downloads/D4.5_Using_spatial_econometrics_in_impact_assessment_final.pdf
Ren S, Yuan B, Ma X, Chen X (2014) International trade, FDI (foreign direct investment) and embodied CO2 emissions: a case study of Chinas industrial sectors. China Econ Rev 28:123–134
Seker F, Ertugrul H M, Cetin M (2015) The impact of foreign direct investment on environmental quality: a bounds testing and causality analysis for Turkey. Rene. and Sustain. Energy Revi 52: 347–356. https://doi.org/10.1016/j.rser.2015.07.118
Shahbaz M, Lorente DB, Sinha A (2019) Foreign direct investment CO2 emissions nexus in Middle East and North African countries: importance of biomass energy consumption. J Clean Prod 217:603–614
Shahbaz M, Nasir MA, Roubaud D (2018) Environmental degradation in France: the effects of FDI, financial development, and energy. Energy Econ 74:843–857. https://doi.org/10.1016/j.eneco.2018.07.020
Shahbaz M, Nasreen S, Abbas F, Anis O (2015) Does foreign direct investment impede environmental quality in high-, middle-, and low-income countries? Energy Econ 51:275–287
Solarin SA, Al-Mulali U (2018) Influence of foreign direct investment on indicators of environmental degradation. J Envi Scie Pollut Rese. https://doi.org/10.1007/s11356-018-2562-5
Solarin SA, Al-Mulali U, Musah I, Ozturk I (2017) Investigating the pollution haven hypothesis in Ghana: an empirical investigation. Energy 124:706–719. https://doi.org/10.1016/j.energy.2017.02.089
Sung B, Song WY, Parka SD (2018) How foreign direct investment affects CO2 emission levels in the Chinese manufacturing industry: evidence from panel data. Econ Systems 42:320–331. https://doi.org/10.1016/j.ecosys.2017.06.002
The Arab Investment and Export Credit Guarantee Corporation (2016). http://dhaman.net/en/research-studies/data-tools/foreign-direct-investment/. Accessed 26 July 2018
Tobey JA (1990) The effects of domestic environmental policy on patterns of international trade: an empirical test. Kyklos Int Rev Soc Sci 43:191–209. https://doi.org/10.1111/j.1467-6435.1990.tb00207.x
UNCTD Data Center, 2018. It is a valuable at: https://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx?sCS_ChosenLang=en. Accessed 23 Jul 2018
United Nations Development Programme (UNDP) (2017) Sustainable Development Goals. http://www.undp.org/content/undp/en/home/sustainabledevelopment-goals.html. Accessed 5 Juley 2018
United States Geological Survey (USGS), International minerals statistics and information 2017. https://www.usgs.gov/centers/nmic/international-minerals-statistics-and-information.
Walter I, Ugelow JL (1979) Environmental policies in developing countries. JSTOR, Ambio 8 2(3):102–109 www.jstor.org/stable/4312437
Wang C, Xinyi ZX, Vilela ALM, Chao LC, Stanley HE (2019) Industrial structure upgrading and the impact of the capital market from 1998 to 2015: a spatial econometric analysis in Chinese regions. Physica A 513:189–201. https://doi.org/10.1016/j.physa.2018.08.168
Wang DT, Chen WY (2014) Foreign direct investment, institutional development, and environmental externalities: evidence from China. J Environ Manag 135:81–90. https://doi.org/10.1016/j.jenvman.2014.01.013
Wang Y, He X (2019) Spatial economic dependency in the environmental Kuznets curve of carbon dioxide: the case of China. J Clea Prod 218:498–510. https://doi.org/10.1016/j.jclepro.2019.01.318
Wang Y, Zhao T (2015) Impacts of energy-related CO2 emissions: evidence from under developed, developing and highly developed regions in China. Ecol Indic 50:186–195. https://doi.org/10.1016/j.ecolind.2014.11.010
Wu S, Li B, Nie Q, Chen (2017) Government expenditure, corruption and total factor productivity. J Clea Prod 168:279–289. https://doi.org/10.1016/j.jclepro.2017.09.043
Ye C, Sun C, Chen L (2018) New evidence for the impact of financial agglomeration on urbanization from a spatial econometric analysis. J Clea Prod 200:65–73. https://doi.org/10.1016/j.jclepro.2018.07.253
Yesilyurt ME, Elhorst JP (2017) Impacts of neighboring countries on military expenditures: a dynamic spatial panel approach. J Peace Rese 54(6):777–790. https://doi.org/10.1177/0022343317707569
Yildirim E (2014) Energy use, CO2 emission, and foreign direct investment: is there any inconsistence between causal relations? J Frontiers Energy 8(3):269
York R, Rosa EA, Dietz T (2003) STIRPAT, IPAT and ImPACT: analytic tools for unpacking the driving forces of environmental impacts. Ecol Econ 46:351–365. https://doi.org/10.1016/S0921-8009(03)00188-5
Yu H (2012) The influential factors of China’s regional energy intensity and its spatial linkages: 1988-2007. Energy Policy 45:583–593
Yuping D, Helian X (2015) International direct investment and transboundary pollution: an empirical analysis of complex networks. Sustai 7:3933–3957. https://doi.org/10.3390/su7043933
Zarsky L (1999) Havens, halos, and spaghetti: untangling the evidence about FDI and the environment. OECD Conference on FDI and the Environment. Paris, In
Zhang C, Zhou X (2016) Does foreign direct investment lead to lower CO2 emissions? Evidence from a regional analysis in China. Renew Sust Energy Rev 58:943–951. https://doi.org/10.1016/j.rser.2015.12.226
Zhang N, Yu K R, Chen Z F (2017). How does urbanization affect carbon dioxide emissions? A cross-country panel data analysis. Energy Policy 107, 678-687. https://doi.org/10.1016/j.enpol.2017.03.072
Zhang G, Zhang N, Liao W (2018) How do population and land urbanization affect CO2 emissions under gravity center change? A spatial econometric analysis. J Clea Prod 202:510–523. https://doi.org/10.1016/j.jclepro.2018.08.146
Zhou Y, Fu J, Kong Y, Wu R (2018) How foreign direct investment influences carbon emissions, based on the empirical analysis of Chinese urban data. J Sustai 10:2163. https://doi.org/10.3390/su10072163
Zhu H, Duan L, Guo Y, Yu K (2016) The effects of FDI, economic growth, and energy consumption on carbon emissions in ASEAN-5: evidence from panel quantile regression. Econ Model 58:237–248. https://doi.org/10.1016/j.econmod.2016.05.003
Zhu L, Gan Q, Liu Y, Yan Z (2017) The impact of foreign direct investment on SO2 emissions in the Beijing-Tianjin-Hebei region: a spatial econometric analysis. J Clea Prod 166:189–196. https://doi.org/10.1016/j.jclepro.2017.08.032
Acknowledgments
We would like to thank anonymous referees for their detailed and constructive comments. We are also grateful to the Editor-in-Chief for his encouragement and high efficiency. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interest
The authors declare that they have no conflicts of interest.
Additional information
Responsible Editor: Nicholas Apergis
Publisher’s note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Appendix
Appendix
Rights and permissions
About this article
Cite this article
Abdo, AB., Li, B., Zhang, X. et al. Influence of FDI on environmental pollution in selected Arab countries: a spatial econometric analysis perspective. Environ Sci Pollut Res 27, 28222–28246 (2020). https://doi.org/10.1007/s11356-020-08810-4
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11356-020-08810-4