The Impact of Economic Growth and Foreign Direct Investment on Environmental Quality in European Countries
DOI:
https://doi.org/10.46793/Rev26113.008KKeywords:
income, environmental pollution, dynamic ordinary least squares, structural effect, new technologiesAbstract
The paper provides an analysis of the dynamic mutual connection between economic growth, foreign direct investment inflows and environmental pollution. The primary focus of the research is to test the validity of the Ecological Kuznets Curve (EKC) and Pollutant Haven Hypotheses (PHH) in selected European countries over the period 1990 to 2021. Using the Dynamic Ordinary Least Squares method (DOLS), the long-term impact of international trade, energy consumption and population on environmental quality is analysed. The results obtained confirm the EKC and PHH hypotheses in European countries for the period 1990 to 2021. The research results indicate that foreign direct investment inflows have a positive impact on CO2 emissions, and therefore on environmental pollution. Based on the results obtained from the research, governments and policymakers are recommended to develop and implement policies to reduce CO2 emissions in order to stimulate economic growth and improve environmental quality. In addition, the introduction of “clean” energy should be supported, and innovations and technological inventions in the fields of hydropower, solar energy, wind energy, etc. should be encouraged.
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