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Does Foreign Direct Investment Harm the Environment in Developing Countries? Dynamic Panel Analysis of Latin American Countries

1
Department of Economics, University of Alaska, Fairbanks, AK 99775-6080, USA
2
Global Strategy Research Center, Korea Trade-Investment Promotion Agency, Seoul 06792, Korea
*
Author to whom correspondence should be addressed.
Academic Editor: Eric Rougier
Economies 2017, 5(4), 39; https://doi.org/10.3390/economies5040039
Received: 12 September 2017 / Revised: 14 October 2017 / Accepted: 16 October 2017 / Published: 23 October 2017
(This article belongs to the Special Issue FDI and Development: Emerging Issues)
This article sets out to study the FDI–environment nexus within a dynamic panel data framework. To that end, the pooled mean group (PMG) method of Pesaran et al. (1999) is used to assess the impact of FDI on CO2 emissions, controlling for income and energy consumption, using a panel of 17 Latin American countries. Our results using the full sample show that FDI increases CO2 emissions, confirming the pollution haven hypothesis. But when splitting the data into different income groups, FDI inflows only in high-income countries increase CO2 emissions. In addition, CO2 emissions with growth tend to increase monotonically within the full sample and middle-income countries. Finally, energy consumption is found to increase CO2 emissions in all cases: the full sample, high-, middle- and low-income countries. View Full-Text
Keywords: CO2 emissions; FDI; Latin America; panel analysis; PMG CO2 emissions; FDI; Latin America; panel analysis; PMG
MDPI and ACS Style

Baek, J.; Choi, Y.J. Does Foreign Direct Investment Harm the Environment in Developing Countries? Dynamic Panel Analysis of Latin American Countries. Economies 2017, 5, 39.

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