1 BỘ GIÁO DỤC VÀ ĐÀO TẠO ĐẠI HỌC KINH TÉ THÀNH PHỐ HÒ CHÍ MINH BÁO CÁO TỐNG KÉT ĐÈ TÀI NGHIÊN cút KHOA HỌC THAM GIA XÉT GIẦI THƯỞNG ‘’NHÀ NGHIÊN CỨU TRẺ UEH” NĂM 2024 IMPACT OF FOREIGN DIRECT INVESTMENTS ON CLIMATE CHANGE IN DEVELOPING ECONOMIES UNDER THE BELT AND ROAD INITIATIVE. Thuộc nhóm chuyên ngành : Tài chính - ngân hàng - chứng khoán - kế toán, kiêm toán, bào hiêm - tín dụng TP. Hồ Chí Minh, tháng 2/2024 2 ABSTRACT In an effort to promote global economic advancement, the Chinese government launched the ambitious Belt and Road Initiative (BRI). To that end, this research uses an annual frequency panel dataset from 2000 to 2020 to explore the energy, economic, and environmental dynamics of 42 BRI developing nations.
Key conclusions from the econometric analysis showed that increased energy consumption, GDP growth, population growth rate, and FDI inflows have a negative impact on the environment by increasing PM2.5 and CO2 emissions of the chosen developing countries that arc members of BRI. Nonetheless, it's noteworthy to note that by further reducing emission levels, utilizing renewable energy sources—which are generally cleaner than fossil fuels—and promoting the growth of the agriculture sector can greatly enhance environmental well-being. However, it is discovered that financial development is insufficient to account for the differences between the chosen countries' CO2 emission and fine dust PM2. Furthermore, the analysis demonstrates that increased energy use, foreign direct investment inflows, and agricultural growth stimulate CO2 emissions and fine dust PM2.5, which in turn lead to environmental pollution.
Based on these results, a number of pertinent policies can be suggested to ensure the environmental sustainability of the Belt and Road Initiative. Keyword: BRI, CO2, PM2.5, FDI 3 CONTENTS ABSTRACT. 3 LIST OF ABBREVIATIONS. 5 LIST OF TABLES AND FIGURES.
OVERVIEW OF THE RESEARCH. Reasons for choosing the topic. Objectives of the study. Object and scope of the study.
New contributions and significance of the topic. New contributions of the topic. Scientific and practical significance of the topic. Structure of the topic.
THEORETICAL BASIS OF THE IMPACT OF FOREIGN DIRECT INVESTMENT ON CLIMATE CHANGE. Theories of foreign direct investment. The concept of foreign direct investment. Impact of foreign direct investment on the recipient country.
Reasons for forming foreign direct investment. Theories of climate change. Concept of climate change. Main causes of climate change.
Methods of measuring climate change. The impact of foreign direct investment on climate change. Pollution Haven Hypothesis. The Halo Effect Hypothesis.
Overview of related literature. Analytical framework and research hypotheses. Current status of foreign investment capital and climate change in developing economies according to the Belt and Road Initiative for the period 2000-2020. Current status of attracting foreign direct investment in developing economies under the Belt and Road Initiative.
Current status of climate change in developing economies under the Belt and Road Initiative 39 CHAPTER 3 METHODOLOGY OF RESEARCH. RESEARCH RESULTS AND DISCUSSION. Correlation coefficient matrix.3 Test for defects of the regression model.2 F-Test and Hausman. CONCLUSION AND RECOMMENDATIONS.
For the government. Limitations of the study and future research directions. 79 5 LIST OF ABBREVIATIONS Abbreviation Full-text 2SLS Two stage least square model ARDL Autoregressive Distributed Lag AMG Augmented Mean Group AGP Agricultural Performance BRI Belt and Road Initiative BRICS Brazil, Russia, India, China, and South Africa CFC Chlorofluorocarbon CH4 Methane CO2 Carbon Dioxide DOLS Dynamic ordinary least squares EKC Environmental Kuznets Curve FDI Foreign Direct Investment FEM Fixed Effects Model FMOLS Fully Modified Ordinary Least FTA Free trade Agreement GDP Gross domestic product GMM Gaussian Mixture Model GPSTR Generalized Panel Smooth Transition Regression GWP Global Warming Potential HCFC Hydrochlorofluorocarbons 6 IFDI Inflows of Foreign Direct Investment IMF International Monetary Fund IPCC Intergovernmental Panel on Climate Change LDCs Less developed countries MENA Middle East and North Africa N20 Nitrous Oxide NOAA National Oceanic and Atmospheric Administration OECD Organization for Economic Cooperation and Development OFDI Outflows of Foreign Direct Investment OLS Ordinary Least Squares POLS Pooled Ordinary Least Square PM2.5 Particulate Matter PMG Pooled Mean Group REM Random Effects Model SDGs Sustainable Development Goals SO2 Sulfur Dioxide TNCs Transnational Corporations UNCTAD United Nations Conference on Trade and Development UNFCCC United Nations Framework Convention on Climate Change VIF Variance Inflation Factor WDI World Development Indicators 7 WTO World Trade Organization WHO World Health Organization WMO World Meteorological Organization 8 LIST OF TABLES AND FIGURES Table 2.1: Summary of previous literatures Table 3.1: Declaration of variables in the model Table 3.2: The list of 42 BRI-associated countries from the lower, upper-middle and upper-middle income group Table 4.1: Descriptive statistics Table 4.2: Correlation matrix between independent variables dependent variable lnCO2 Table 4.3: Correlation matrix between independent variables dependent variable InPM Table 4.4: Results of testing the variance inflation factor VIF Table 4.5: F-test result Table 4.6: Hausman result Table 4.7: Heteroskedasticity result Table 4.8: Autocorrelation test Table 4.9: Summary of regression results Figure 2.1: Analytical framework Figure 3.1: Model processing 9 CHAPTER 1. OVERVIEW OF THE RESEARCH 1.
Reasons for choosing the topic The world has recently become very interested in the Chinese government’s Bell and Road Initiative (BRI) due to the significant economic and environmental effects it will have on the participating countries. Since its 2013 inception, this project has promoted strong economic cooperation amongst a number of Asian, European, and African nations (Irshad 2015). The Belt and Road Initiative (BRI) is similar to the old Silk Road, which played a significant role in uniting the East and the West on a number of socioeconomic fronts for many centuries. Similar to this, the Belt and Road Initiative (BRI) builds massive infrastructure and improves communication and transportation with the goal of fostering a win-win economic environment for the countries it works with.
Over the preceding five years, there has been a significant increase in the number of nations participating in the Bell and Road Initiative (BRI). For instance, in March 2020, there were 13 8 countries, up from 91 in 2018 across the five major continents (Chen et al. 2020a, b; Coenen et al. In light of this, it may be claimed that the BRI's objective is to develop into a global network in order to initiate significant changes that will quicken the economic growth of its member countries.
The BRI member nations account for over 50% of global productivity and about 70% of the world's population (World Bank 2020). It is anticipated that the Belt and Road Initiative (BRI) would face opposition in the near future, but if it is carried out well, its participants—China foremost—will be positioned as important regional and global leaders. By reducing the barriers that these countries have previously encountered, the Belt and Road Initiative's current primary objective is to promote trade and commerce in this region (Chan et al. Consequently, the Chinese government has devised an extensive investment plan aimed at establishing economic corridors and developing infrastructure in this region.
Additionally, the total contract value under the BRI climbed by more than 60% when compared to the same period in the previous year (MOFCOM 2019). Moreover, the International Energy Agency estimates that energy spending in BRI projects have more than doubled over time (IEA 2014). Furthermore, estimates by the China Power Team (2017) indicate that by 2030, infrastructure investments in Asia- Pacific countries will be valued al roughly 23 trillion US dollars under the BRI. It can 10 be argued that about two thirds of all investments made under the BRI have gone into developing countries, with the ultimate goal being to accelerate their rates of economic growth.
In the meantime, the Belt and Road Initiative (BRI) is puiported to have launched over 7000 new development projects, mostly in the areas of power plants, transportation, and poverty alleviation. Together, these investment patterns suggest that in the years to come, the Belt and Road Initiative (BRI) is anticipated to significantly increase energy consumption among its member countries. In addition to fostering economic benefits, the Belt and Road Initiative (BRI) is expected to have serious negative environmental repercussions because it is expected to dramatically raise the energy demand of the member nations (Baloch et al. 2019; Wen et al.
Furthermore, when more developing countries decide to take part in the BRI program, it is realistic to expect a rise in the environmental problems caused by energy use in the next few years. This is because the majority of each country's electrical generation comes from fossil fuels, primarily gas, coal, and furnace oils in developing nations (Rehman et al. 2019; Murshed and Tanha 2021; Murshed et al. Moreover, it is believed that in their quest for globalization, rising countries prioritize economic growth over environmental degradation (Murshed 2020a, b; Murshed et al.
Therefore, it is plausible to predict that all of the participating developing nations will experience environmental impact as a result of the execution of the Belt and Road Initiative (BRI) given these conditions. Additionally, a number of earlier studies have looked at the relationship between the energy economy and the environment in the context of developing nations, accounting for those nations' reliance on fossil fuels and the trade-offs between environmental deterioration and economic progress. However, the results have been inconclusive. Furthermore, the question of whether the BRI would ensure ecologically sustainable growth in the emerging low- and middle-income member nations of the BRI has received little attention in the literature.
In light of this, the authors' topic of choice for the Belt and Road Initiative was "Impact of FDI on climate change in developing economies." The study examines the dynamics of the energy-economy-environment nexus in the context of 42 developing countries within the Belt and Road Initiative using annual frequency data from 2000 to 2020. Objectives of the study The overall goal of the project is to research and determine the level of impact of FD1 capital on climate change in developing economies under the Belt and Road Initiative. From there, the topic sets out two specific goals: First, consider the impact of FDI on climate change in developing economies under the BRI in the period 2000-2020. Second, propose solutions drawn from research results to improve the efficiency of using FDI capital by governments and businesses for investment-receiving countries in developing economies under the BRI.
Therefore, the group proposed the research question: The correlation between FDI capital flows and climate change, specifically CO2 emissions and PM 2. Object and scope of the study 1. Research subjects The topic focuses on researching FDI inflows, the cuiTent situation of climate change and the impact of FDI on climate change of developing economies under the BRI. Research scope The topic focuses on researching FDI inflows, the current situation of climate change and the impact of FDI on climate change of developing economies under the BRI.
- Regarding research space: The research focuses on analyzing the impact of foreign direct investment on climate change in 42 developing economies under the BRI. - Regarding research time: Research evaluation over a period of 21 years (2000 2020) 1. Research Methods To use a combination of different research methods. Accordingly, theoretical methods include analysis, theoretical synthesis, theoretical classification and systematization.
Next, based on the collected data, the topic statistics, analyzes and evaluates the 12 coiTelation between variables in the model through descriptive statistical methods. Finally, the study uses quantitative analysis methods with econometric regression models to determine the relationship between foreign direct investment and climate change. New contributions and significance of the topic 1. New contributions of the topic Although there have been many studies on the impact of FDI on the environment, very few of them have delved into the issue of climate change in developing countries under the Belt and Road Initiative through the use of fixed effects regression models.
Scientific and practical significance of the topic Scientifically, this research result contributes to the system of previous studies on the impact of FDI on global issues, specifically clarifying the relationship between FDI capital flows and climate change through statistics and econometric models.