Abstract
The Pollution Haven Hypothesis (PHH) dominates the literature in environmental economics. Though most empirical studies have sought to validate or refute this theory, their findings appeared inconclusive and inconsistent. Limited empirical evidence explaining the relationship between air pollution, and Foreign Direct Investment (FDI) inflows in the sub-African economic bloc known as Economic Community of West African States (ECOWAS) member states has necessitated the current study. This study examines whether FDI inflows drive air pollution. The target population represents 15 member states of ECOWAS. The source of data is primarily secondary data. Data were gathered from international organizations such as United Nations (through United Nations Environmental Programme) and World Bank. The analysis method was observation of cross-sectional panel data over 61 years from 1960 to 2020 employing advanced econometric modelling methods (cross-sectional dependency test, panel unit root, panel cointegration, causality test, FMOLS, CCEMG). The study findings failed to confirm the PHH theory for the relationship between capital allocation (FDI) and environmental degradation (AQI) for the member countries of ECOWAS. These findings imply that despite member states having lax environmental regulations yet fail to attract FDI inflows from advanced countries via investment from high polluting multinational firms as predicted by the PHH theory. The study outcomes have several implications for policy enactment, environmental protection, and developmental approach. Member states should encourage FDI inflow from high polluting firms in advanced economies by creating tax free industrial zones in their respective jurisdiction.
Presenters
Esther Owusu BaffoeRegional Coordinator for Ghana School Feeding Programme, Ghana School Feeding Programme, Ministry of Gender, Children, & Social Protection, Ghana Anthony Dawson Amoah
Relationship Manager, Customer Service, Universal Merchant Bank, Greater Accra, Ghana Francis Ayensu
Student, PhD, Jiangsu University, Jiangsu, China Ike Obeng
Teacher, Oyoko Methodist Senior High School, Ghana Education Service, Ghana David Kissi
Lecturer, School of Business, All Nations University, Eastern, Ghana
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
2026 Special Focus—Unseen Unsustainability: Addressing Hidden Risks to Long-Term Wellbeing for All
KEYWORDS
Pollution Haven Hypothesis, Air pollution, FDI inflows, ECOWAS member states
