The impact of FDI on regional air pollution in the Republic of Korea: A way ahead to achieve the green growth strategy?

By Erik Hille, Muhammad Shahbaz, Imad A. Moosa. Energy Economics, 2019

160 citations recorded by the source corpus.

Can FDI help to reduce regional air pollution emissions in Korea? Given the proclamation of a far-reaching national green growth strategy that requires a shift in public and private investments, this paper addresses the need for empirical estimates on the environmental consequences of FDI inflows into Korea. Using a simultaneous equations model the impacts of FDI inflows are decomposed into direct as well as indirect scale, composition, and technique effects. Thereby, the analysis utilizes panel data on six air pollutants in 16 Korean provinces and self-governing cities for the time period 2000 to 2011. The estimation results show that FDI inflows concurrently stimulate regional economic growth and reduce air pollution intensities. However, the total level of air emissions mostly remains unchanged. While confirming the findings of the existing national level research on the FDI‐growth relationship in Korea, the results are partly contrary to the respective earlier findings on the FDI‐environment nexus. Given Korea’s high level of development paired with the aforementioned impact on economic growth and air pollution intensities, foreign investments are, therefore, regarded as one potential pillar to achieve the goals of the green growth strategy.

Subfields: Economics and Econometrics, Environmental Engineering

View Paper: https://www.semanticscholar.org/paper/8d8f8bcaae12975e6a746fad9e7c5825782e0135

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Citations in the corpus

The effect of FDI on environmental emissions: Evidence from a meta-analysis (2020, background): “partly due to the shifting of polluting activities to developing countries (Kearsley and Riddel, 2010). Anecdotal evidence give credence to the PHH as developing countries simultaneously account for the largest shares of FDI inflow and global emissions. Even though the World Investment Report of UNC”
Green Innovation and Finance in Asia (2020, unknown): “There is empirical evidence that FDI inflows stimulate regional economic growth, reduce emissions intensities, and contribute to green growth strategies (Hille et al., 2019).”
Decomposing Scale and Technique Effects of Financial Development and Foreign Direct Investment on Renewable Energy Consumption (2022, background): “For Malaysian economy, Islam et al. (2013) applied multivariate function to examine relationship between financial development and energy consumption and noted that financial development declines energy consumption by increasing energy efficiency.”