How does FDI in the agricultural and fishing sector affect methane emission? Evidence from the OECD countries

In this work we focus on Foreign Direct Investment (FDI) inflowing in the agriculture and fishing sector of the OECD area to observe how and with what magnitude it impacts on Methane (CH4) emission. A dataset containing statistics for 30 OECD countries from 1990 to 2015 is organised and analysed through the panel data technique. We find positive coefficients characterising the relationships of the technique, scale and cumulative effects of FDI on CH4 which would denote the detrimental role FDI has on the environment. However, the very low magnitude shown by the estimated coefficients highlights a very minimal influence of FDI on CH4, which even decreases as FDI grows. According to the literature on free market economy, we particularly explain this result by referring to FDI as a driving force of technology transfer capable of promoting allocative efficiency among countries and generating minor levels of environmental impact. Therefore, we argue in favour of those policy indications supporting the strengthening of investment in the sector. Our results are consistent across different estimators and robust to a number of alternative specifications.