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FDI, Green Innovation and Environmental Quality Nexus: New Insights from BRICS Economies

Author

Listed:
  • Najabat Ali

    (Environmental Assessment and Technology for Hazardous Waste Management Research Center, Faculty of Environmental Management, Prince of Songkla University, Songkhla 90110, Thailand
    Faculty of Management Sciences, Hamdard University, Islamabad 45550, Pakistan)

  • Khamphe Phoungthong

    (Environmental Assessment and Technology for Hazardous Waste Management Research Center, Faculty of Environmental Management, Prince of Songkla University, Songkhla 90110, Thailand)

  • Kuaanan Techato

    (Environmental Assessment and Technology for Hazardous Waste Management Research Center, Faculty of Environmental Management, Prince of Songkla University, Songkhla 90110, Thailand)

  • Waheed Ali

    (School of Economics and Finance, Xi’an Jiaotong University, Xi’an 710000, China)

  • Shah Abbas

    (Gongqing Institute of Science and Technology, Gongqing 332020, China)

  • Joshuva Arockia Dhanraj

    (Centre for Automation and Robotics (ANRO), Department of Mechanical Engineering, Hindustan Institute of Technology and Science, Padur, Chennai 603103, India)

  • Anwar Khan

    (School of Economics, Xiamen University, Xiamen 361005, China)

Abstract

One major concern about foreign direct investment (FDI) is the potential negative environmental impact due to increased CO 2 emissions. However, there is a possibility that FDI mitigates CO 2 emissions through green innovation and creates a cleaner environment. In the existing literature, there is no significant empirical evidence on the linkage among FDI, green innovation and CO 2 emissions in the context of BRICS countries. Hence, this study aims to analyze the impact of FDI and green innovation on the environmental quality of BRICS economies for 1990–2014. The study employed Augmented Mean Group (AMG) estimators for empirical data analysis. The study’s findings depict that foreign direct investment, energy use, and economic growth have a significant and positive impact on the CO 2 emissions of BRICS economies. Moreover, green innovation has a significant inverse impact on CO 2 emissions. The results show bidirectional causalities between CO 2 emissions and green innovation, trade openness and CO 2 emissions, energy use and CO 2 emissions, and urbanization and CO 2 emissions. Additionally, the findings reveal a one-way causality from CO 2 emissions to GDP and CO 2 emissions to urbanization. This study offers essential policy recommendations for the environmental sustainability of BRICS countries through green innovation.

Suggested Citation

  • Najabat Ali & Khamphe Phoungthong & Kuaanan Techato & Waheed Ali & Shah Abbas & Joshuva Arockia Dhanraj & Anwar Khan, 2022. "FDI, Green Innovation and Environmental Quality Nexus: New Insights from BRICS Economies," Sustainability, MDPI, vol. 14(4), pages 1-17, February.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:4:p:2181-:d:749364
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