Environmental degradation and economic activities in OECD countries

Abstract

The relationship between environmental degradation and economic growth has been widely discussed. The aim of this paper is to explore the relationship between environmental pollution and economic activities in the OECD countries for the period 1996-2018. We applied environmental Kuznets curve model extended with foreign direct investment (FDI) and trade openness using panel technique to test the existence of environmental Kuznets curve (EKC) and pollution haven hypothesis (PHH). Our results support the presence of a EKC and confirm the PHH in OECD countries. Furthermore, the findings reveal that trade openness increase of 1% will decrease carbon emission by 0.31%, while FDI increase of 1% will raise carbon dioxide emission by 0.013%.