An Empirical Investigation between FDI, Tourism, and Trade on CO2 Emission in Asia: Testing Environmental Kuznet Curve and Pollution Haven Hypothesis

Abstract

This study aims to analyze the influence of foreign direct investment (FDI), tourism, exports, and imports on carbon dioxide (CO2) emissions in the High-Income State, Upper-Middle Income, and Lower-Middle-Middle Income in Asia during the period of 2010-2019. This study uses the Poisson Pseudo-Maximum Likelihood method. The results of this study indicate that Environmental Kuznets Curve Hypothesis is valid in the country of High Income and Upper-Middle Income. In addition, there is a non-linear relationship between FDI, tourism, Export, and imports on carbon dioxide (CO2) emissions. The interaction variables, which are a FDI with tourism and FDI with Export. Each of them is reducing carbon dioxide emissions only in high-income countries. Meanwhile, the interaction variables between FDI and imports reduce carbon dioxide emissions in high-income countries. However, it increases the carbon dioxide emissions in the upper-middle-income country.