Is There a Trade-off Between Economic Growth, Foreign Direct Investment, International Trade and Environmental Degradation? A Comparison Between Asian Developed and Developing Countries.

This article investigates the trade-offs between economic growth, foreign direct investment (FDI), international trade, and environmental degradation in 17 Asian countries from 1996 to 2019, using advanced econometric models including the Panel Autoregressive Distributed Lag (P-ARDL) and Panel Vector Error Correction Model (VECM) Granger causality tests. The study confirms a long-term equilibrium relationship among CO₂ emissions, economic growth, FDI, and trade openness, supporting the Environmental Kuznets Curve (EKC) hypothesis: economic growth initially increases environmental degradation but eventually leads to environmental improvement, particularly in developed countries. It also provides evidence for the pollution haven hypothesis, showing that FDI and trade openness tend to increase CO₂ emissions in developing countries due to lax environmental regulations and reliance on fossil fuels, while developed countries experience less environmental harm. These findings highlight the importance of tailored policies to promote sustainable growth, attract green investment, and minimize environmental damage across different stages of economic development in Asia.