The impact of foreign direct investment (FDI)‎ and trade openness (TR)‎ on environmental quality : the case of Brazil

Abstract EN

English Summary:
In recent years, the attraction of foreign direct investment from developed countries to developing countries, as well as the adoption of trade liberalization policies had a significant positive impact on economic growth while imposing enormous pressures on the environment.

The study's main objective is to investigate the impact of Foreign Direct Investment (FDI) and the Trade Openness on the environment quality in Brazil for the period from 1990 to 2020, employing the CO2 emissions as a dependent variable.

Using a time series analysis, which begins with investigating the stationarity of the variables, and with the use of ARDL co-integration methodology, in addition to estimating the short-run and the long-run elasticity.

The study is organized as follows.

Section (1) contains the introduction.

Section (2) presents the literature review, whereas Section (3) presents the data, econometric specification, and methodology, Section (4) is about the empirical results, and the final section is about the conclusion.

The results show that on the long run all the variables under study have a significant positive impact except the energy usage at 1% level of significance on the CO2 emissions in Brazil.

Finally, the study concludes that increasing Foreign Direct Investment (FDI) and Trade Openness (TR) will result in more carbon emissions into the atmosphere (more air pollution) and hence lower environmental quality.