The Contribution of Outward Foreign Direct Investment, Human Well-Being, and Technology toward a Sustainable Environment

Abstract

This study evaluates the impact of outward foreign direct investment (OFDI), human well-being, and other macro indicators of the public sector on carbon footprint. Empirical analysis has been carried out for newly industrialized economies that span the period 1990–2017. We used augmented mean group and bootstrap panel causality techniques to cogitate the cross-sectional dependence and country-specific heterogeneity. Based on cross-country analysis, study results show that growing OFDI reduces carbon footprint efficiently in Mexico and Turkey, human well-being decreases emissions in the Philippines, and urbanization reduces emissions in China. Further, technology reduces emissions in Malaysia and Turkey, trade openness reduces emissions in China and Malaysia, and natural resource rents reduce emissions in Indonesia and Mexico. In the case of panel analysis, the moderating role of OFDI with human well-being is contributing toward a sustainable environment. Moreover, the moderation of OFDI and urbanization has an insignificant impact on CFP. Findings depict that interaction terms of OFDI with technology and trade openness have a positive association with the environment quality. Finally, OFDI and natural resources have positive moderation on CFP. This study contributes to the existing literature by suggesting policy implications for a sustainable environment.