Foreign Direct Investment and Environmental Impacts in D8 Countries: Analysis of the Pollution Haven, Pollution Halo and Environmental Kuznets Curve Hypotheses

Foreign direct investments are an important component of global economic integration and promote economic growth in developing countries. However, these investments can lead to environmental degradation and increase the ecological footprint, especially in countries with inadequate environmental legislation. This situation can become a factor that threatens environmental sustainability with industrialization and increasing resource consumption. The aim of this study is to test the Pollution Haven, Pollution Halo and Environmental Kuznets Curve hypotheses. For this purpose, the FMOLS long-term coefficient estimator was used based on the data from 1995 to 2022 in D8 countries. According to the results obtained, it was found that the Pollution Haven hypothesis is valid, while the Pollution Halo and Environmental Kuznets Curve hypotheses are not valid. These findings show that foreign direct investments in D8 countries can increase environmental degradation and that these countries need stricter environmental policies.