The role of technology innovation and people's connectivity in testing environmental Kuznets curve and pollution heaven hypotheses across the Belt and Road host countries: new evidence from Method of Moments Quantile Regression

The Belt and Road Initiative (BRI) is closely linked to the ecological sustainability of the infrastructure ventures that intrinsically include the aspects of climate change and pollution. Though there exists literature on the environmental Kuznets curve (EKC) and pollution haven hypothesis (PHH), very few explore the scope in the light of Belt and Road host countries (B&RCs). Therefore, the study examines the income-induced EKC and Chinese outward foreign direct investment (FDI)-based PHH in the multivariate framework of people's connectivity and technology innovation in B&RCs from 2003 to 2018. The outcome of the study reveals that the observed relationship is quantile-dependent, which may disclose misleading results in previous studies using traditional methodologies that address the averages. Utilizing the novel Method of Moments Quantile Regression (MMQR) of Machado and Silva (J Econom 213:145-173, 2019), the findings confirm an inverted U-shape association between economic growth and CO(2)emissions only at lower to medium emission countries, thus validating the EKC hypothesis. The Chinese outward FDI flows increase carbon emissions at medium to high emission countries, thereby confirming PHH. The findings also indicate that people's connectivity contributes to increasing emissions while innovation mitigates carbon emissions at lower to medium polluted countries. Moreover, the outcomes of Granger causality confirm one-way causality between economic growth and CO(2)emissions, between FDI and CO(2)emissions, between people's connectivity and CO(2)emissions, and between innovation and CO(2)emissions. The results offer valuable insight for legislators to counteract CO(2)emissions in B&RCs through innovation-led energy conservation in infrastructure projects while adopting green and sustainable financing mechanisms to materialize mega construction projects under the BRI.

Automated summary

The study examines the impact of the Belt and Road Initiative on the ecological sustainability of infrastructure projects, finding an inverted U-shaped association between economic growth and CO(2) emissions, as well as an increase in carbon emissions in medium to high emission countries due to Chinese outward FDI. People's connectivity contributes to emissions while innovation helps mitigate carbon emissions in lower to medium polluted countries.