Abstract
The present study explores the effects of globalization and foreign direct investment
(FDI) on environmental quality in OIC countries. The main purpose of the study is to
analyze that how opening of OIC economies together with inward FDI affect the
environmental quality in terms of CO2 emissions. In this study, GMM technique has
been applied to address the endogeneity issue in the variables of globalization and foreign
direct investment, among others. The results of GMM method of estimation show that
globalization and FDI enhance CO2 emissions, means lowering environmental quality in
overall OIC countries and low-income OIC countries but reduces CO2 emissions in highincome OIC countries. Institutional quality, urbanization and industrialization have
considerable impact on CO2 emissions in overall OIC countries as well as low income
and high income OIC countries. The study showed that globalization and foreign direct
investment are contributing to improving the environmental quality in high-income OIC
states but reduces environmental quality in all OIC states and low-income OIC countries.
The present study comes up with the useful information that opening of markets of OIC
countries to the world and inward foreign direct investment have very strong influence on
the environmental quality and both factors should be used in a way which leads to
lowering the level of carbon emissions in OIC states.
Fatima Farooq, Imran Sharif Chaudhry, Zulkornain Yusop, Muzafar Shah Habibullah. (2020) How Do Globalization and Foreign Direct Investment Affect Environmental Quality in OIC Member Countries? , Pakistan Journal of Commerce and Social Sciences, Volume 14, Issue 2.
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