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Economic growth and environmental sustainability in developing economies

Author

Listed:
  • Hunjra, Ahmed Imran
  • Bouri, Elie
  • Azam, Muhammad
  • Azam, Rauf I
  • Dai, Jiapeng

Abstract

This study examines the impact of economic growth and foreign direct investment (FDI) on environmental degradation in 76 developing economies between 1991 and 2022, using various panel data models. Firstly, the environmental Kuznets curve hypothesis is supported, indicating that, as the economy expands, cleaner technologies and practices are adopted, resulting in lower carbon emissions. Secondly, FDI and carbon emissions are positively related, suggesting that investment type and regulatory frameworks must be considered carefully. This analysis underlines the impact of abundant natural resources on emissions and stresses the significance of diversification strategies and the transition to cleaner technologies. Thirdly, further analysis involving interaction effects indicates that environmental degradation increases when high economic growth, abundant resources, and substantial FDI occur simultaneously. These findings highlight the importance of devising context-specific strategies and policies to balance economic growth and environmental sustainability in developing economies.

Suggested Citation

  • Hunjra, Ahmed Imran & Bouri, Elie & Azam, Muhammad & Azam, Rauf I & Dai, Jiapeng, 2024. "Economic growth and environmental sustainability in developing economies," Research in International Business and Finance, Elsevier, vol. 70(PA).
    • Handle: RePEc:eee:riibaf:v:70:y:2024:i:pa:s027553192400134x
    DOI: 10.1016/j.ribaf.2024.102341
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    Cited by:

    1. Chen, Jiamin & Chen, Yuwei, 2024. "Does natural resources rent promote carbon neutrality: The role of digital finance," Resources Policy, Elsevier, vol. 92(C).

    More about this item

    Keywords

    Economic growth; foreign direct investment (FDI); CO2 emissions; environmental sustainability; developing countries;
    All these keywords.

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • O49 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Other
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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