FOREIGN DIRECT INVESTMENT AND ENVIRONMENTAL DEGRADATION: BRICS ECONOMIES EVIDENCES

Abstract

This study examines the relationship between Foreign Direct Investment (FDI) and environmental degradation in BRICS economies—Brazil, Russia, India, China, and South Africa—over the past two decades. As BRICS countries continue to attract substantial FDI inflows due to rapid industrialization and market expansion, concerns have emerged regarding the environmental consequences of foreign-led economic activities. Using panel data and econometric techniques, the research evaluates whether FDI contributes to environmental degradation through increased carbon emissions, energy consumption, and resource depletion, or whether it supports environmental improvement via technology transfer and cleaner production methods. The analysis also investigates the applicability of the Pollution Haven Hypothesis and Pollution Halo Hypothesis within the BRICS context. Preliminary evidence suggests mixed outcomes: while FDI stimulates economic growth, it also tends to increase environmental pressures in some BRICS economies, particularly those with weaker regulatory frameworks. Conversely, countries with stronger environmental policies appear to benefit from greener technologies brought by multinational enterprises. Overall, the study highlights the need for balanced policy approaches that attract sustainable FDI while enforcing effective environmental regulations. The findings provide valuable insights for policymakers seeking to promote economic development without compromising environmental sustainability