Abstract
The technological innovation and strict environmental protocols in the highly developed regions have become the primary sources for foreign direct investment to move in the pollution haven economies. In this regard, this study attempted to identify the role of foreign direct investment (FDI) in the developing economies of the Brazil, Russia, India, China, and South Africa (BRICS) region. For this reason, a dataset was obtained between 1995 and 2019. Chudik and Pesaran’s (2015) latest dynamic common correlated effects (DCCE) technique is used because of its new features when integrating the problems of heterogeneity and structural breaks into panel data that are general and do not encompass much recent research in this context. According to the empirical outcomes, foreign direct investment is a source of pollution haven in this region. However, the moderating effect of institutional quality on foreign direct investment has been found negative for ecological footprint. It also found the threshold point where the foreign direct investment effect becomes negative on ecological footprint. Based on these empirical results, this research suggests that foreign direct investment strategy should be maintained in the presence of good institutional efficiency as it enhances the environment and promotes economic development.
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The datasets used and/ or analyzed during the current study are available from the corresponding author on reasonable request.
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This research paper is contributed by the abovementioned authors in the following way: Conceptualization is done by Imran Sharif Chaudhry and Qaiser Abbas; methodology is formed by Weihua Yin; software and validation and formal analysis are performed by Muhammad Faheem; investigation, resources, and data curation are performed by Syed Ahtsham Ali and Saeed Ur Rahman; writing—original draft preparation is done by Fatima Farooq; writing—review and editing, visualization, and supervision are done by Muhammad Faheem and Qaiser Abbas.
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Chaudhry, .S., Yin, W., Ali, S.A. et al. Moderating role of institutional quality in validation of pollution haven hypothesis in BRICS: a new evidence by using DCCE approach. Environ Sci Pollut Res 29, 9193–9202 (2022). https://doi.org/10.1007/s11356-021-16087-4
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DOI: https://doi.org/10.1007/s11356-021-16087-4