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Does green innovation moderate between FDI and environmental sustainability? Empirical evidence from South Asia.

ABSTRACT: The study aims to investigate how foreign direct investment (FDI) and green innovation (GI) impact environmental quality in South Asia. Moreover, this study examines the moderating role of GI between FDI and environmental sustainability. We use panel data from 1995 to 2018 for five South Asian nations namely, Pakistan, India, Bangladesh, Sri Lanka, and Nepal. For the empirical analysis, we used 1st generation cointegration like Pedroni and Kao, and 2nd generation cointegration tests like Westerlund. Moreover, for the long-run relationship, we employ fully modified least squares (FMOLS) and dynamic ordinary least squares (DOLS) estimation. The study's empirical results suggest that GI significantly enhances ecological sustainability in South Asian economies; however, FDI degrades the environmental quality. Furthermore, the results suggest that GI significantly moderates the nexus of FDI and ecological sustainability in South Asia. It is recommended that South Asian countries increase green innovation with FDI so that environmental quality can be assured for the region's sustainable development.

SUBMITTER: Brohi AA

PROVIDER: S-EPMC10635563 | biostudies-literature | 2023

REPOSITORIES: biostudies-literature

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Does green innovation moderate between FDI and environmental sustainability? Empirical evidence from South Asia.

Brohi Awais Ahmed AA Suzuki Yoshihisa Y

PloS one 20231109 11

The study aims to investigate how foreign direct investment (FDI) and green innovation (GI) impact environmental quality in South Asia. Moreover, this study examines the moderating role of GI between FDI and environmental sustainability. We use panel data from 1995 to 2018 for five South Asian nations namely, Pakistan, India, Bangladesh, Sri Lanka, and Nepal. For the empirical analysis, we used 1st generation cointegration like Pedroni and Kao, and 2nd generation cointegration tests like Westerl ...[more]

PMID: 37943855

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Project description:Unquestionably, the industrial revolution of the twenty-first century contributes to global warming. Excessive amounts of carbon emissions into the atmosphere are responsible for global warming. Therefore, this research aims to assess the impact of GDP, green energy consumption, population, trade openness, and democracy on CO2 emissions in four selected South Asian countries from 1990 to 2019. This research also attempts to evaluate the EKC hypothesis in terms of economic growth (GDP2). The unit root of panel data and cointegration tests are executed in this study as a prelude to the regression analysis. Quantile regression for panel data, which (Powell, 2016) devised to deal with the fixed effect problem, is used in this study, and (Powell, 2016) empirical findings are the main focus. The estimated coefficient of GDP is positively significant, demonstrating that economic activity increases the burning of fossil fuels and upsurges atmospheric CO2 emissions. After attaining economic development, the reversed U-shaped EKC theory is valid for four selected South Asian countries. Economic development encourages these countries to use green technology, which helps mitigate CO2 emissions. The research, however, reveals that green energy is to blame for CO2 emissions. Burning biomass releases carbon dioxide that negatively impacts the quality of the environment. The study confirms that human activities are the leading contributor to environmental deterioration. Population growth has a worsening effect on the environment. The association between population and CO2 emissions is positively significant. The estimated coefficient of trade openness is positive, which increases CO2 emissions significantly. The estimated coefficient of democracy is quite negative. Therefore, this study suggests prioritizing democracy to reduce CO2 emissions. Citizens who live in democracies are better informed, more organized, and able to protest, all of which contribute to increased government responsiveness to environmental preservation. The results of the Wald test support the differential effects at various quantiles. The Dumitrescu-Hurlin (2012) panel causality tests are also used in this analysis to check causality between variables. Based on the findings, this research makes many policy suggestions for lowering carbon emissions.

Dataset Information

Does green innovation moderate between FDI and environmental sustainability? Empirical evidence from South Asia.

Publications

Does green innovation moderate between FDI and environmental sustainability? Empirical evidence from South Asia.

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