Impact of foreign direct investments on the environmen: Evidence from European Union transition economics

Foreign direct investments have begun to increase as of 1980s and become an important source of investment and technological transfer especially for developing countries and emerging economies. Many countries have tried to attract foreign direct investments through institutional and economic instruments regarding the positive economic effects of foreign direct investments. In this study, the impact of foreign direct investments and economic growth on environment was examined in sample of 11 European Union transition economies for the period of 1996-2018 through second generation cointegration test and causality analysis. As a result of the study, it has been revealed no significant causality interaction among the variables. Furthermore, we revealed that foreign direct investments did not have a significant impact on environment, but economic growth negativel affected the environment in the long run.