Moderating Impact of FDI on the Growth-Environment Link in the Ekc Framework: Evidence from Various Income Levels of Economies in the Pre-Covid-19 Eras

Given the ambiguity regarding the contribution of FDI in managing environment in the growth process of host countries, this paper uses the Environmental Kuznets Curve (EKC) framework to investigate FDI’s moderating presence in the nexus amid economic progression and environment in 115 countries and various income panels of countries from 1992 to 2019. The results reveal a significant positive influence of energy consumption on CO2 discharges across all income panels. Also, the interaction between FDI and square GDP leads to a decrease in CO2 emissions for low and lower-middle income countries, and a drop in PM2.5 discharges for low, lower middle, high income and overall income levels. Moreover, the interaction of FDI with manufacturing growth exhibits a negative influence on emissions reduction in both low and lower-middle income economies, and a reduction in CH4 discharges for upper-middle, high income, and overall income levels, supporting the EKC hypothesis.