A Dynamic Approach to the FDI-Environment Nexus: The Case of China and India

Jungho Baek · Koo Won W.

72 citations0/0 files storedEast Asian Economic Review

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Energy, Environment, Economic Growth International Business and FDI Sustainable Development and Environmental Policy

Abstract

An autoregressive distributed lag (ARDL) model is applied to examine the short- and long-run relationships among foreign direct investment (FDI), economic growth, and the environment in China and India. We find that, for China, FDI tends to deteriorate environmental quality in both the short- and long-run. For India, on the other hand, FDI is found to have a detrimental effect on the environment in the short-run, but has little effect in the long-run. Finally, it is found that income growth in both countries tends to worsen the environment in both short- and long-run.

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References

1987Co-Integration and Error Correction: Representation, Estimation, and Testing 1988On the mechanics of economic development 2001Bounds testing approaches to the analysis of level relationships 1986Increasing Returns and Long-Run Growth 1988Statistical analysis of cointegration vectors 1995Toward a New Conception of the Environment-Competitiveness Relationship 1993Innovation and Growth in the Global Economy.1992Efficient Tests for an Autoregressive Unit Root

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