The Empirical Study on the Impact of FDI in the manufacturing sector on CO2 emission in Thailand
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Abstract
Climate change is one of the most serious threats to human lives. Although foreign direct investment inflows have contributed to industry and economic expansion in Thailand, the studies on the environmental impact of foreign direct investment have not reached consensus. This paper aims to investigate the relationship between CO2 emission and FDI in the manufacturing sector in Thailand, together with other factors relating to economic growth, namely, capital accumulation, GDP per capita, economic structure of agriculture, and trade openness. In this study, the Autoregressive Distributed Lag model is used on time series data covering the period of 1983-2020. The empirical results suggest that (i) foreign direct investment in the manufacturing sector contributes to CO2 emission reductions in Thailand, supporting the pollution halo hypothesis; (ii) trade openness and capital accumulation impedes environmental quality; (iii) agriculture shares has a negative effect on CO2 emissions. However, our study does not find significant impact of growth on CO2 emissions. The results of the study also provide policymakers with some policy recommendations.
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References
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