Revisiting the pollution haven hypothesis in ASEAN-5 countries: new insights from panel data analysis

Pollution haven hypothesis (PHH) has been investigated extensively in the existing literature due to global environmental issues such as global warming and climate change. However, there is still no consensus on whether this hypothesis is valid. Therefore, the aim of this study is to examine the validity of the PHH in ASEAN-5 countries (Indonesia, Malaysia, Philippines, Singapore, and Thailand) covering the period of 1981-2014. It is utilized the up-to-date panel data techniques taking cross-sectional dependence and slope heterogeneity into account to test the relationship. According to the results of CCEMG and AMG estimators, the validity of the PHH is confirmed in ASEAN-5 countries. The increase in foreign direct investments (FDI) increases environmental degradation in these countries. Our additional findings show that the environmental Kuznets curve (EKC) hypothesis (EKC) is also valid in these countries. There is an inverted U shape between economic growth and CO2 emissions. In addition, energy consumption exacerbates CO2 emissions.