The repercussions of foreign direct investment, renewable energy and health expenditure on environmental decay? An econometric analysis of B&RI countries

Abstract

To achieve the objectives of the study, we have analyzed the repercussions of income, foreign direct investment, health expenditure and renewable energy consumption on environmental pollution (CO2) in a panel of Belt and Road Initiative (B&RI) countries over the time span 1995–2016. The study employed a second-generation unit root test, panel co-integration, two-step generalized method of moments (GMM), fully modified least squares (FMOLS), symmetric and asymmetric causalities for robust inference. The cointegration results established the long-run relationship between the variables. Empirical results indicated the effectiveness of renewable energy in combatting CO2 emissions, the negative sign of FDI with CO2 emissions negates the existence of the pollution haven hypothesis for the B&RI panel. Where income and health expenditure accelerates CO2 emissions, which degrades the environment, these results in the case of individual countries differ in various stages. Varieties of symmetric and asymmetric causalities are also discussed in the study. The study concludes with long term policies, which are necessary for the sustained growth of B&RI countries.