Studying the EKC, HHP and REH Hypothesizes in D8 Countries: FMLOS Approach

Abstract

According to apposite and ambiguous opinions about the effects of foreign direct investment and innovation on environmental performance in developing countries, in this research despite the environmental Kuznets curve (EKC) hypothesis, pollution haven hypothesis (PHH), and rebound effects hypothesis (REH) in D8 countries (Iran, Turkey, Malaysia, Indonesia, Egypt, Pakistan, Bangladesh, and Nigeria) were studied. For this purpose, the required data was gathered from World Bank during the years 2000-2018. Also, the fully modified ordinary least squares (FMLOS) model and STATA software were applied for analyzing data. Results of variables description indicated that during the studied period, Iran has the lowest average amount of FDI to GDP, the lowest average amount of per capita GDP growth, the highest average of the proportion of fossil energies to total energy consumption, and the highest average of the proportion of per capita CO2 emission. In addition, the results of the specification of the econometrics model showed that there is a U inverse relationship between GDP and CO2 in D8 countries. Therefore, the EKC hypothesis is approved for studied countries. Also, foreign direct investment has a positive significant effect (in 10%) on CO2 emission. Hence, the PHH hypothesis is approved for studied countries. Finally, innovation has a negative significant effect (in 5%) on CO2 emission. Hence, the REH hypothesis didn’t approve for studied countries.

Keywords

• ekc hypothesis
• phh hypothesis
• reh hypothesis
• d8 countries
• fmols model