Nexus among tourism, environmental degradation, inward FDI and economic growth: Fresh Evidence from ASEAN countries

This study aims to investigate the linkage among tourism, foreign direct investment, environmental degradation by CO2 emissions and economic growth in five countries from Association of Southeast Asian Nations (ASEAN) over 1995–2017. The outcomes of pooled mean group (PMG) estimator reveal that FDI and international tourism arrivals have a significantly positive influence on economic growth both in the short-run and the long-run. The association between growth and CO2 emissions is found negative and significant. The Granger causality result reveals that there is bidirectional causality between FDI and growth, tourism and growth and FDI and tourism. A unidirectional causal link is found between CO2 emissions and growth, tourism and population and population and CO2 emissions. These findings suggest enhance more inward FDI, control environmental pollution, but also necessary to attract more tourists towards these countries, which in turn, generate revenue and boost up economic growth


Introduction
Sustainable economic development refers to the process of human development in a manner by which natural resources and the environment is sustained and preserved for future generations. Development is said to be sustainable when it fulfills the requirements of the current generation without disturbing the capability of upcoming generations to meet their requirements (World Commission, 1987). Development is a multifaceted course, which possesses the capability of a national economy, to produce and maintain yearly progress of macroeconomic indicators (Caracota & Caracota, 2004). According to Marin et al. (2012), sustainable development is the association between environmental sustainability, economic development and human development. In this regard, tourism is considered as a significant pillar of sustainable development (Gössling, 2002). Tourism plays a fundamental role in encouraging the economic development (ED)of a country and grants foreign revenue to the country (Oh, 2005). According to Zaei and Zaei (2013), tourism plays an essential part in the progress of emerging economies. In the view of Archer (1995), tourism has multiple impacts since it creates employment, improves the balance of payments and also increases the level of gross savings. Tourism not only contributes to per capita GDP but it also contributes towards human development and investment in infrastructure (Fayissa, Nsiah, & Tadesse, 2011).
Likewise, FDI inflows are also considered a significant factor of economic development, asMakki and Somwaru (2004) observes the influence of FDI on the EG of 66 developing economies and found that FDI has a positive influence on the EG. Similarly, Nosheen (2013) also exposed a positive nexus between FDI and EG in case of Pakistan. The causal link among FDI and EG is found bidirectional for 17 countries (Abdouli & Hammami, 2017). FDI is useful for less industrial economies as it is a very important source of employment creation, augmenting labor productivity, organizational growth, export expansion and improvement in the production of domestic firms (Aziz & Mishra, 2016;World Bank, 2013).
The current study attempts to investigate the connection among CO2 emissions and EG. According to Martıńez-Zarzoso and Bengochea-Morancho (2004), CO2 emissions is inversely related to economic development in low-income countries while this relationship becomes positive in case of high-income countries. Similarly, Boopen and Vinesh (2011) concluded that CO2emission is inversely linked with economic development. In their study, Han and Lee (2013) found an opposite relationship between EG and CO2emission for G-20 nations. Also, Twerefou et al. (2016) examined the nexus between pollution and EG in Ghana and exposed a negative link amongCO2emissions and EG in Ghana. Bekun and Agboola (2019) also found an inverse connection among CO2 emissions and ED in 16 EU countries.
As far as the tourism sector is concerned, it plays an incredibly imperative role in a country's development. Tourism growth stimulates feasible economic opportunities, which helps in economic expansion and employment generation. Tourism has several encouraging impacts on economic growth but it also has adverse effects on the atmosphere in the form of CO2 emissions. According to the "United Nations World Tourism Organization", the tourism sector emits 5% of total CO2 emissions, mostly from the accommodation, transportation and other tourism activities. (UNWTO, 2017). In their study, Danish and Wang (2018) found a positive association, whereas it has a considerably depressing effect on environmental degradation (ED) in BRICS economies during 1995-2014. Kadir and Karim (2012) found that tourism positively contributes to the economic development of Malaysia. The findings of Ardra and Martawardaya (2017) study revealed that tourism has a positive along with significant effect on HDI and ED and it also has a considerable effect on poverty reduction in selected ASEAN countries between 1998. Almasaied et al. (2008 observed a positive link among FDI and ED in five ASEAN countries. .On the other side, Saudi et al. (2017) analyzed the nexus among ED and CO2 emissions and exposed positive nexus among them. Prior studies have analyzed the nexus among tourism, EG, FDI, and carbon emissions and found mixed evidence regarding their interrelationships. Thus, this study is carried out to get fresh insights into the effects of tourism growth, inward FDI, environmental degradation, and EG in the context of five ASEAN economies. The current study contributes to the existing empirical literature by investigating the said issue using the latest available data for five ASEAN economies. Further, this study bifurcates the impact of said predictors in the shortrun and long-run separately using PMG estimators. This article is prearranged as follows: section 2 offers insights into the existing literature regarding the linkage among tourism, FDI, CO2 emissions, and ED. The variables of the study, model, and data description are presented in section 3. The estimation techniques are illustrated in section 4 followed by the empirical findings and discussion and conclusion in the Fifth section of the study.

Literature Review
The literature review is categorized with respect to the linkages of tourism, FDI inflows, CO2 emissions, and economic development.

Nexus between tourism and economic growth
Tourism plays a vital role in the economic progress of the host country. In this regard, Ashley et al. (2007) pointed out that tourism improves economic growth and also creates employment opportunities and reduces poverty, especially in developing countries. Likewise, Brida and Risso (2009) studied the impact of tourism on the EG of Chili during 1986-2007 and found that tourism is positively linked with the ED of Chili. According to Belloumi (2010), tourism is significantly related to economic development in Tunisia during 1970Tunisia during -2007. He pointed out that a long-run causality runs from tourism receipts to economic development in Tunisia. The revenues generated from tourism play an extremely crucial role in the EG of India, Pakistan, China, and Russia (Tiwari, 2011). Ohlan (2017) examines the nexus among tourism and the EG of India during 1960-2014. The outcome of his study reveals that tourism is completely linked to EG. Similarly, Balli et al. (2019) found a direct linkage among tourism and ED. They studied the link among tourism, EG and CO2 emissions in Mediterranean countries and concluded that tourism is significantly linked with economic progress and CO2 emissions. In their study, Manzoor et al. (2019) found that tourism is positively linked with EG and employment in Pakistan during 1990-2015..

Nexus between FDI and economic growth
A voluminous literature addresses the nexus between FDI and EG in different contexts. For instance, Nair-Reichert and Weinhold (2001) revealed in their study that FDI is significantly linked with ED. Likewise, according to Buckley et al. (2002), FDI not only covers the savinginvestment discrepancy but also enhances tax revenue and human capital along with the prerequisite of technology for the production of goods and services. Likewise, Makki and Somwaru (2004) found a significant connection among FDI and EG in 66 emerging economies. Moreover, Li and Liu (2005) found a strong links between FDI and ED not only in industrial countries but also in developing economies. Likewise, Hansen and Rand (2006) (Omri et al., 2014). Further, Koojaroenprasit (2012) studied the influence of FDI on ED in Korea from 1980 to 2009 and found a significantly significant and positive effect. Similarly, Shahbaz and Rahman (2010) investigated the association between FDI and EG for Pakistan and found a significant relationship. Besides, Abdouli and Hammami (2017) studied the nexus among FDI and EG of 17 countries and concluded that there exists a two-way causal link between FDI and ED. In a study by Phuyal and Sunuwar (2018), exposed a significant nexus is found between FDI and ED in Nepal during 2007. Similarly, Dinh et al. (2019 found a positive nexus among FDI and EG.

Nexus between CO2 emissions and economic growth
Carbon emissions are inversely related to EG in low-income countries whereas the relation of CO2 emissions with economic development becomes positive in case of high-income countries. Likewise, Arouri et al. (2012) examined the connection between energy use, CO2 emissions, and ED and their results reveals that CO2 emission is negatively associated to EG in selected MENA countries. Besides, Halicioglu (2009) also explored the nexus among FDI, energy use, CO2 emissions, and EG in Turkey and found a causality among CO2 emissions and EG.A one-way causal nexus among CO2 emissions and EG is found for Tunisia from 1961 to 2004 (Fodha & Zaghdoud, 2010). While Azam et al. (2016) found an inverse link between energy utilization, CO2 emissions, and EG in Japan, USA, India, and China during 1971-2013. Similarly, Bekun and Agboola (2019) also found a negative nexus among CO2 emissions and progress of the economy in 16-EU countries. On the other hand, Richmond and Kaufmann (2006) found no association between CO2 emissions and EG. In a similar vein, Zhang and Cheng (2009)

Nexus between tourism and CO2 emissions
The tourism sector increases energy utilization in several ways including increased use of transportation, accommodation, construction, and other activities resulting in increased air pollution and environmental degradation (Becken et al,, 2001;Nawaz & Hassan, 2016). Likewise, Scott et al. (2010) also pointed out that the tourism sector is associated with lots of economic activities that make tourism a probable threat to the environment through high CO2emissions. According to Aref and Redzuan (2009), tourism has a deteriorating effect on the environment in the form of air pollution, noise pollution, traffic jamming, and demolish the natural environment. While Al-Mulali et al. (2015) studied the association between tourist arrivals and CO2 emissions in the top 48 tourist economies. The results of their study revealed that a CO2 emission is increasing due to the arrivals of international tourists in these selected countries. Also, Zhang and Gao (2016) surveyed the connection between tourism, EG, environmental pollution, and energy utilization in China and concluded that tourism inversely affects the atmosphere. Besides, Kolawole et al. (2016) studied the ecological effects of tourism on people's quality of life and found a significantly negative link between tourism and people's quality of life. While Dogan et al. (2017)concludes that energy utilization and tourism increase the intensity of CO2 emissions in OECD countries.

Prior studies on ASEAN countries
A lot of work is also done on the linkage among tourism, CO2 emissions, FDI, and ED in ASEAN countries. As according to Ashley et al. (2007), tourism is one of the most important sources of economy in ASEAN countries, as it is professed as an active industry, which increases the state revenue and creates job opportunities in ASEAN countries. The result of Holik (2016) study reveals that tourism significantly contributes to EG in these five ASEAN countries. According to the study of Chulaphan and Barahona (2018), tourism plays a crucial part in the economic development of Thailand during 2008-2015. The tourist arrivals from Southeast Asia enhance the growth rate in Thailand. Likewise, Azam et al. (2019) observed the link between tourism and environment and concluded that tourism augments environmental pollution in Malaysia while in the context of Thailand and Singapore, the impact of tourism on environmental pollution is found negative throughout the study period. Vo and Le (2019) found no connection between CO2 emissions, energy use, and renewable energy (RE) utilization in five ASEAN countries.. While in the case of Indonesia, one-way causality from EG to energy utilization and CO2 emission is found.
The following conclusion can be drawn from accessible literature. The link between tourism and EG is very clear that tourism is one of the most imperative factors of ED. Likewise, the effect of FDI on economic progress is also found to be positive in several prior studies. The linkage among CO2 emissions and ED is inconclusive since one strand of literature found a significant nexusamongCO2 emissions and EG either positive or negative. Several studies found an insignificant nexus between environmental degradation and EG. This study attempts to fill this gap in the literature by presenting fresh evidence using the latest data on the nexus of tourism growth, CO2 emissions, FDI inflows and EG in ASEAN countries. Some more recent studies are tabulated in Table 1.

Data and Empirical Methodology 3.1. Data and its sources
In the current study, panel data on five ASEAN countries has been used over the period of 1995-2017. All the data were taken from World Development Indicators (WDI) 2020, the World Bank. GDP per capita (constant 2010 US$) represent economic growth and tourism, FDI, CO2 emissions, and population growth are also used in this study.

Correlation matrix and descriptive statistics
The summary of descriptive statistics and correlation matrix of selected ASEAN countries are presented in The annual growth rate of the population growth rate is very high at about 2.5608%, which is recorded in the economy of Malaysia in 1997, while the minimum growth rate of population is 0.3452% and it is found in Thailand in 2017. The population growth rate has an average value of 1.3906% and the standard deviation is 0.5452%.

Theoretical framework and empirical model
The current study follows the growth literature and develops the growth model, first proposed by Samuelson and Solow (1956) and amplified by Mankiw and Romerand (1992), Barro et al. (1995), and Barro (2013). According to Solow (1956), the growth rate depends upon three main factors namely, labor, physical capital, and technological progress. The mathematical form of the Solow growth model is given below: ( ) = ( ( ) , ( ) , ( ) ) … (1) Where, 't' shows time period, 'Y' represent productivity, 'K' indicates capital, 'L' represent labor and 'A' represent knowledge.
Tourism, as a regressor, is used by Holik (2016) for five ASEAN countries, Ohlan (2017) for India, Manzoor et al. (2019) for Pakistan, Mustafa (2019) for Sri Lanka and Shaheen et al. (2019) for top-10 tourist countries. Inward FDI is also considered an essential factor for EG, and in a lot of studies, FDI is used as a key factor of economic progress. As in some previous studies of Choong (2009) The current study also utilized population growth in order to check its effect on EG in selected ASEAN countries. Based on the Solow (1956) growth model and previous literature, this study develops the following model with little modification, presented in Equation (2).
where, i= 1, 2……, N indicates panel members and t= 1, 2…, n indicates time. Similarly, 0 − 4 are the coefficients, Y represents per capita GDP growth, FDI is foreign direct investment, ITR is international tourism, CO2 is carbon dioxide emission, PG is population growth and is the error term. Equation (2) states that FDI plays a decisive part in achieving higher economic development and it is used widely in previous literature as a determinant of ED. Previous studies such as Makki and Somwaru (2004), Shahbaz and Rahman (2010), Azam (2016) and Dinh et al. (2019) used FDI as a determinant of EG and found a positive along with significant effect of FDI on ED. International tourism is considered as a pillar to sustainable development. According to Ashley et al. (2007), tourism enhances EG and create employment opportunities and also shrink poverty, especially in emergent economies of the world. Belloumi (2010) and Ohlan (2017) also exposed a positive nexus among tourism and ED. The current study anticipates a positive nexus among tourism and EG. Environmental pollution is inversely linked with economic progress and it negatively affects the growth and development Martıńez-Zarzoso and Bengochea-Morancho  (2019). Population growth has also some influence on the economic development of every country and a rapid increase in population growth reduces the growth of the economy. As per the findings of Siddiqui and Mahmood (1998), Yao et al. (2013) and Zhang (2015), population growth is negatively linked with economic growth.

Estimation procedure 4.1 Panel unit root tests (PURTs)
There is criticism on the classical unit root tests due to their low power in case of small samples. Therefore, PURTs are used in this study. This study employs the most popular and reliable PURTs proposed by Levin, Lin, and Chu (2002), and the ADF-Fisher Chi-square proposed by Maddala and Wu (1999)are utilized.

PMG estimator
Since this study has found the evidence of mixed order of integration among study variables, therefore, PMG estimator proposed by Pesaran and Shin (1998) is utilized for estimating the model coefficients. Johansen (1998) and Phillips and Hansen (1990) are of the view that longterm association is merely found in the perspective of cointegration among variables of the similar order of integration. While Pesaran, Shin, and Smith (2001)are of the view that the Autoregressive Distributed Lag (ARDL)method as proposed by Pesaran and Shin (1998)is appropriate irrespective of the integration order of the variables. The PMG estimator gives consistent coefficients regardless of the existence of endogeneity.
The dynamic panel ARDL model proposed by Pesaran, Shin, and Smith (1999)is utilized in this study is as follows: The gdppc is the growth rate of per capita GDP (dependent variable); (K x 1) is the vector of regressor (independent variables) with foreign direct investment, tourism arrivals, CO2 emissions and population growth. indicates the fixed effect, represents the coefficients of the response variable, are (Kx1) coefficient vectors of the regressors and is the error term. Assuming that the variables will respond to any deviation from the long-run equilibrium, the error-correction model of the model presented in Equation (3), for capturing the short-run dynamics and short-run coefficients, is presented in Equation (4)

Panel Granger causality test
The granger causality test was proposed by Granger in 1969. It is a technique to check the causality among two variables in a time series (Granger, 1969). The procedure is a probabilistic version of causality; it utilizes empirical data set to discover the pattern of correlations and the direction of causality.

Results and Discussions
This study employs three well-known PURTs namely: LLC, IPS, and ADF for stationary checking, and the outcome of PURTs are presented in Table 4. The outcome shown in Table 4 illustrates that international tourism and CO2 emissions are non-stationary at the level and it becomes stationary at first difference. However, other variables are stationary at the level. The outcomes of PURTs reveal mixed order of integration i.e. (0) and (1). According to the nature of the data and outcome of PURTs, this study utilized the PMG estimator for empirical investigation. The results obtained from PMG estimator are presented in Table 5, which reveals that almost all variables are significant with their expected signs. The results obtained from PMG estimator are significant both in the short as well as long run.
FDI has a statistically significant effect on EG both in the long and short run. A one percent rise in FDI will boost up EG by 0.115% in the long run. This result is in line with past researches such as Makki and Somwaru (2004), Shahbaz and Rahman (2010), Azam et al. (2016), andDinh et al. (2019). Tourism plays an incredibly crucial part of the economic progress of the host country. Tourism plays a decisive role to endorse the economic progress of the economy and provides foreign revenue to the host country. The connection between tourism and economic progress is also found positive, which means that as tourism improves in selected ASEAN countries, it will enhance EG. The impact of tourism on EG is found to be positive in the short as well as long term as well. The outcome of PMG about the linkage between tourism and economic progress area similar to the findings of Brida andRisso (2009), Belloumi (2010) and Ohlan (2017).
Another variable utilized in the study is CO2 emissions to verify its effect on economic development in ASEAN countries. The outcomes of PMG reveal that CO2 emissions are inversely associated with economic development in selected ASEAN countries. From Table 5, it is confirmed that CO2 emissions have a discouraging and harmful impact on EG, which means that as the level of CO2 emissions increase, it will reduce the pace of economic progress. The inverse relationship between CO2 emissions and economic progress is also found byArouri et al. The influence of population growth on EG is found positive in the long term while it is negative in short term. The effect of population growth is harmful in the short run, which means that as the population rate increases, it will damage EG. Our results are consistent with the finding by Azam et al (2020), while contradictory with the findings by Yao et al. (2013) and Zhang (2015) as these studies found an inverse nexus among population growth and economic progress. Furthermore, the pair-wise Granger causality has been mentioned in Table 6. The outcome demonstrates that there exist bidirectional causality among FDI and ED. This shows that as FDI increase it will enhance economic progress and similarly, economic growth also causes FDI. Empirical findings of the bidirectional linkage between FDI and economic progress are alike to the findings of (Abdouli & Hammami, 2017). The outcomes of pair-wise Granger causality further demonstrate that there is a two-way causality among tourism and economic progress, and between tourism and FDI. A change in the number of international tourism arrivals brings a change in economic growth and it also causes FDI. In a similar vein, EG and FDI also cause international tourism; it may increase or decrease tourist arrivals. The results of Table 6 reveal that unidirectional causality is found between CO2 emissions and ED, tourism and population growth and population growth and CO2 emissions. Figure 2 shows direction of causality among economic growth, FDI, tourism, environmental pollution and population growth

Conclusion
The current study aims to discover the association among tourism, FDI, environmental pollution and ED in selected five ASEAN countries during 1995-2017. The following conclusion is drawn from this empirical analysis;  The result reveals that some variables are stationary at a level while other variables are stationary at the first difference.  The PMG estimator shows that FDI and economic progress are positively associated. It shows that the rise in FDI will enhance the EG.  International tourism arrivals have a significant along with positive effect on ED. As the number of tourist arrivals improves, it will enhance the economic progress in ASEAN countries. The effect of tourism arrivals is found significant both in the short as well as long term.  Environmental pollution is inversely related to EG, which shows that high intensity of CO2 emissions will severely damage the pace of economic progress. The inverse linking between CO2 emissions and ED is found both in the long as well as short run.  Population growth has a depressing effect on economic progress in the short term while its impact becomes positive in the long term.  The pairwise granger causality reveals a two-way causal link among FDI and economic progress, tourism and economic progress and tourism and FDI. A one way causality is found from CO2 emissions to economic progress, tourism to population growth and population growth to CO2 emissions. Since FDI positively contributes to the EG of ASEAN economies, the policymakers in these countries must design their policies that attract foreign investments such as easing the business conditions, easing the visa restrictions, special business permits among others. Likewise, tourism positively contributes to the economic growth in ASEAN countries, policies to augment the tourism sector should be designed to enhance EG. These may include easing visa process (evisa), visa on arrival, special tourism packages, and online facilitation regarding various kinds of tourism among others. The study has also revealed a negative impact of CO2 emissions on EG, which calls for actions to mitigate CO2 emissions to protect the environment. These policies may include increased use of REs sources such as wind and solar energy, eco-friendly growth policies, green financing etc. for achieving sustainable growth. Since population growth also adversely affects the EG in ASEAN countries, it is imperative to control the population growth in these countries to achieve a sustainable growth pattern.

DECLARATIONS -Ethical Approval and Consent to Participate
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