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Exploring the Relationship Between Democracy and the Environment: The Moderating Role of FDI

In: Global Perspectives on Climate Change, Inequality, and Multinational Corporations

Author

Listed:
  • João Bento

    (Polytechnical Institute of Lisbon)

  • Miguel M. Torres

    (Kent Business School, University of Kent)

Abstract

This chapter investigates the environmental effects of FDI and democracy using a panel dataset of 160 countries for the period from 1980 to 2021. It also examines the marginal effects of FDI at the mean and various percentile values of the composite democracy indicator. The findings demonstrate that FDI significantly reduces environmental emissions as countries increase their level of democracy. Evidence shows that the interaction between FDI and democracy leads to the pollution halo hypothesis. The mitigation effect is larger in countries that present higher levels of democracy and attract more FDI.

Suggested Citation

  • João Bento & Miguel M. Torres, 2025. "Exploring the Relationship Between Democracy and the Environment: The Moderating Role of FDI," CSR, Sustainability, Ethics & Governance, in: João Bento & Miguel M. Torres (ed.), Global Perspectives on Climate Change, Inequality, and Multinational Corporations, pages 283-308, Springer.
    • Handle: RePEc:spr:csrchp:978-3-031-80797-8_12
    DOI: 10.1007/978-3-031-80797-8_12
    as

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