Investigating the pollution haven hypothesis in Cote d'Ivoire: evidence from autoregressive distributed lag (ARDL) approach with structural breaks

The pollution haven hypothesis (PHH) suggests that foreign direct investment (FDI) inflows contribute to rising carbon dioxide (CO₂) emissions in developing countries. This study aims to investigate the validity of the PHH in Cote d'Ivoire. For this purpose, FDI, real gross domestic product (GDP) per capita, energy consumption, and agriculture value added are included in the carbon dioxide emissions' function. Based on time series data spanning from 1980 to 2014, the study utilized the autoregressive distributed lag (ARDL) approach. In addition to the introduction of structural breaks in the estimations techniques, this study contributes to the literature by focusing on a typical developing country that is currently experiencing increases both in FDI inflows and in CO₂ emissions. The findings indicated a cointegration relationship between the variables. Additionally, the ARDL results validate the PHH in Cote d'Ivoire as we find a positive relationship between FDI and CO₂ emissions. Likewise, the results showed that GDP per capita, energy consumption, and agriculture value added have a positive impact on CO₂ emissions. Based on the results, we advise Ivorian policymakers to strengthen the environmental regulations and focus on attracting clean FDI. Besides, the Ivorian government should implement energy-saving policies and promote the use of environment-friendly techniques in the agriculture sector.