The impact of Foreign Direct Investment (FDI) and Trade Openness (TR) on Environmental Quality: The Case of Brazil

Abstract

: This paper investigates the effect of Foreign Direct Investment (FDI) and the Trade Openness on the environment quality in Brazil for the period from 1990 to 2020. Using a time series analysis, which begins with investigating the stationarity of the variables, and with the use of ARDL co-integration methodology, in addition to estimating the short-run and the long-run elasticity. The main findings of the paper show that all variables have a significant positive impact except the energy usage at 1% level of significance on the CO2 emissions in Brazil, i.e., higher Foreign Direct Investment (FDI) and Trade Openness (TR) will result in more carbon emissions into the atmosphere (more air pollution) and hence lower environmental quality.