Unpacking the FDI-Poverty-Environment Link : Insights from the MENA Region

Abstract

This paper aims to investigate the causal links that may exist between foreign direct investment, poverty and environmental quality and this study is particularly relevant for a set of countries in the MENA region. By performing an estimation for a simultaneous equation model using the the Three-Stage Least Squares (3SLS) technique for the period from 1996 to 2022, the results reveal a bidirectional causality between poverty and CO2 emissions. Notably, a unidirectional causal relationship emerges, with CO2 emissions influencing poverty without any feedback mechanism. However, no evidence of a significant relationship between FDI and poverty is found.