Analysing FDI inflow effects on CO2 emissions: a comparative study of OECD and BRICS nations with PHH and PHE models

Abstract

Purpose The purpose of this study is to explore the correlation between foreign direct investment (FDI) and carbon dioxide (CO2) emissions in emerging economies, with a particular emphasis on Brazil, Russia, India, China and South Africa (BRICS) countries along with 10 the Organization for Economic Cooperation and Development nations. Design/methodology/approach This study uses quantitative research methods and econometric analysis to investigate the relationship between FDI inflows and CO2 emissions in selected countries. Specifically, the research concentrates on assessing the impact of FDI on CO2 emissions within the BRICS countries. By examining data spanning from 2000 to 2003, the study aims to shed light on the interaction between economic integration and environmental sustainability dynamics on a global scale. Findings The results of this study highlight notable contributors to CO2 emissions within the BRICS countries, identifying Switzerland, Denmark and the UK as significant sources. These findings support the notion of a pollution haven, underscoring the influence of FDI in moulding environmental outcomes in developing economies. Research limitations/implications Drawing from the study’s outcomes, suggestions are put forth to foster sustainable development strategies. It is recommended that BRICS nations prioritize the attraction of environmentally aware FDI to bolster efforts aimed at mitigating environmental harm. Originality/value This study adds to the ongoing discussion surrounding sustainable development by offering a concentrated analysis of how FDI influences CO2 emissions within BRICS countries. Its novelty lies in questioning traditional assumptions about environmental accountability and emphasizing the necessity for cooperative endeavours between emerging and developed economies to effectively tackle global environmental issues.