The Relationship between Economic Growth, Foreign Direct Investment and Environmental Pollution in BRICS-T Countries: Empirical Analysis of the Environmental Kuznets Curve and Pollution Haven Hypotheses

Global warming, environmental pollution and uncontrolled use of resources are accepted as critical threats to human life and sustainable development. This study aims to examine the relationships between economic growth, foreign direct investment and environmental pollution in BRICS-T countries in the context of environmental Kuznets curve and pollution haven hypotheses. Second-generation panel data analysis methods were employed in the study, in which annual data from the period 1992-2017 were used. Findings obtained from the cointegration test indicate that the variables move together in the long run, that is, they are cointegrated. According to the result of the estimation, it has been determined that the environmental Kuznets curve, which claims that there is an inverted-U-shaped relationship between environmental pollution and economic growth, and the pollution haven hypothesis, which states that there is a positive relationship between environmental pollution and foreign direct investments, are both valid for BRICS-T countries. From the causality test, however, empirical evidence shows that there is a one-way causality relationship from economic growth to environmental pollution and from environmental pollution to foreign direct investment. Based on the evidence obtained, it is recommended that BRICS-T countries focus more on sustainable development and environment rather than economic growth, and improve their foreign direct investment standards.