Study the Effects of Public Policy in Developing Countries on the Relationship between FDI and Environmental Pollution

Main Article Content

Hoang Phuong Nguyen , Viet Duc Bui

Abstract

Foreign direct investment (FDI) is considered as a key artery of capital flows that have a positive impact on the economic growth of nations. An indisputable fact is that many developing countries pursue FDI attraction policies for the sake of growth, ignoring environmental hazards. Under the pollution haven hypothesis, developing countries, which attract a lot of FDI inflows, will gradually become & quot; polluted paradise" compared to developed countries. process of industrialization. On the other hand, public policy also plays a significant role in the relationship between FDI and the level of environmental pollution. Accordingly, the objective of the study is to empirically assess the role of public policy in the relationship between FDI and the level of environmental pollution in developing countries. In terms of methodology, the author built an experimental model evaluated by testing the hypothesis of the Kuznets-EKC environmental curve with the database of 86 developing countries from 2007 - 2019. The study results imply that FDI has a positive impact on the level of environmental pollution in developing countries. In particular, public policy plays an important role in the relationship between FDI and the level of environmental pollution in this case study. From this result, the author draws on the policy implication that developing countries need to consider carefully in receiving FDI inflows and managing FDI enterprises more effectively to minimize negative impacts of this factor to the environment.

Article Details

Section
Articles