Considering the conceptual model of the study, it is worthy to scope all the relevant theories that can partially or fully support the paths. Therefore, the most relevant theories aligned with our model are EKCT and pollution heaven hypothesis. Both theories are stated in a proper way to display the links among the factors. Simon Kuznets  was the first one who proposed the Kuznets curve hypotheses, displays that as an economy develops, preliminary variation increases and later slowly shrinkages . Researchers link this phenomenon to the positive signals for investors who see intend to invest in a country that is growing and have more investment opportunities [6, 44, 45]. This, in turn, advantages environmental quality and protection. The Kuznets curve line displays that when a nation experience industrialization and agriculture mechanization, the economic epicenter of the state will exchange to urban areas [6, 46]. Hence, farmers incline to gather into big cities for the purpose of getting highly paid jobs. It means there is a big gap and inequality between rural and urban areas. Since the urban population becomes rich while the rural population shifts toward poverty because firms’ owners enjoy higher profit over labors in a particular industry. Nevertheless, the gap (inequality) then drops when EG touches the peak theme of mediocre revenue and the wellbeing of the nation reach from development to democratization, assists high growth and leading to an upward GDP per capita. Kuznets describes that inequality would have a tendency like an overturned U-shape as it first improves and then declines along with the increased of GPD. In fact, the Kuznets curve demonstrates an inverted U-shape curve, many predictors with axes that are normally matched and jointed, such as the Gini coefficient on the Y-axis and GDP and time and ED on the X-axis. With the passage of time and around a few decades later, Grossman and Krueger,  tested this premise in the environmental context. It displays that ED and economic development have an upturned U-shaped association which is referred to as the Environmental Kuznets curve theory (EKCT). For instance, the EKCT describes that ED and fiscal progress have a positive association. When a nation growing in the first phase, the living standard of people may be the expenditure of the atmosphere. But on the achievement of high economic growth, uncertainties about the ecosystem and environment begin (Figure 1). The reversed U-shaped results of the EKC curve is supported by many empirical pieces of evidence such as Shafik  and . It has become very popular in shaping ecological strategy. Onafowora and Owoye’s  claimed that the long-run connection between ED and economic development presents an N-shape. However, Al-Mulali and Ozturk  shown a U-shaped association between ED and GDP.
How EKC works in an economy over time is described in Figure 1. It demonstrates that a country becomes an economic ladder, the influence of the growth can cause an upturn in ED. It is the portion of the Kuznets curve before E point (a rotating point), there is a rational and useful logic behind a growing economy displaying an upward ED. As income increasing (due to FDI) in an economy, its production level will increase. The benefits of high production facilitate the economy in the ED. In Figure 1, point E is the turning point which shows that ED makes a U-turn and declines as EG upsurges. However, after point E, despite an upward shift in the income, ED moves to deterioration, and the EKC ends up as an inverted U-shape association. Apergis et al.  collected evidence from mixed regions and indicated an interconnection among energy practice, emissions, and income. Another data sample of high, middle and low-income countries displays an inverted U-shaped relationship between emissions and income economies and has supported the EKC theme . Regarding EKC, the idea of the pollutionhavenhypothesis is worthy. According to the hypothesis, in a country where there are strict environmental regulations, it is expensive for big businesses to achieve environmentally worsening maneuvers. In contrast, in evolving economies where environmental rules are not so strict, it is not so difficult to operate a polluting industry and labor is also not expensive. Hence most of the factories try to move to developing economies where there are less expensive labors and lower environmental regulations .
The second theory that is affiliated with our model is “the pollution heaven hypothesis” is also discussed on this issue which describes that industries with high pollution will be shifted to the domains where less rigorous environmental regulations have existed. There are two major benefits of FDI for a host country. First, FDI can reduce ED through technological innovation. Second, it is argued that FDI specifically focuses on environmental issues which increase environmental pollution where polluting industries can be shifted from rich to poor nations due to lack of ecological procedures in the host nations.
Figure 1. Environmental Kuznets curve.
FDI and Environmental Degradation
Environmental pollution has become a serious problem in developing and developed economies across the globe due to an increased level of change in industrial growth. A number of policies and strategies have been formulated to enhance the environmental quality [55-57]. Despite active engagement and programs, many countries, especially from Asia, have failed to gain satisfactory environmental performance [31, 58] due to a deficiency of resources and support [25, 59]. In this case, out of several indicators, FDI has been considered a significant predictor of ED [3, 8, 57]. However, there is a controversial documentary on the role of FDI in the ED. For instance, it is argued that the effects of the FDI can go any way, such as they may have positive effects in the form of the sustainability and FD of the economy, but at the same time they have negative effects on the environmental phenomena of the country. However, it depends on the sector, the FDI is targeting. Considering these backgrounds, there may be three different hypotheses related to these relationships between the FDIs and the environmental hazards, such as the first one is the pollution haven hypothesis, the next one is the pollution halo hypothesis, and finally the third one is the scale effects hypothesis . Theoretically speaking, there could be a myriad of different belongings of the FDI on the environmental dimension of the nation. For example, these FDIs would affect the quality of the environment, however, the empirical evidence in this regard as divergent. For example, in China, an empirical study demonstrated that one of the major consequences of the FDIs is the high levels of emission of the CO2 . These results are contrary to the opinions of  who analyzed the BRICS and argued that the FDI is more effective in developing greener technologies, which benefits the host countries, which ultimately improves the overall environmental conditions of the host country. Supplementing to this discussion,  while considering the China at regional level units of analysis demonstrated the positive effects of the FDI on the environment such as improved and greener technologies, while on the same time, and  while considering the City-Level data from China also reports that there are severe negative consequences of the FDI on the environmental deterioration, such as increased range of CO2 emissions in the areas received higher levels of the FDIs. Such contradictory results, even from a single country warrants more detailed studies considering the effects of the FDI on the environmental conditions of the countries. Furthermore, the evidence forms the other developing countries also report that although the FDI illustrates a favorable link with the EG of these countries, at the same time they have severe negative effects of the FDI on the EDs, particularly, in Malaysia  and Taiwan .
More surprisingly, in Taiwan, income and FDI are the two major contributors to the increased level of CO2 emissions . While expanding the sample to other countries, particularly, the ASEAN countries, such as 5 countries, also suggests that the increased level of the FDIs results in a high range of energy expenditure, which ultimately leads to the increased level of CO2 emission . However, another study conducted on the same ASEAN countries, suggested that there are FDIs and the CO2 are negatively related to each other . In contrast, conducted another study on these 5 countries while using the Pooled Mean Group (PMG) estimation technique in the dynamic panel and demonstrated that FDI inclines to produce more CO2. Paramati et al.  also demonstrated that FDIs inflow has a positive, significant effect on the clean energy consumption emission levels of the CO2. Considering these surprisingly contradictory pieces of evidence even within the same set of countries, it is important to see the main causes of these differences in exhibiting the contradictory relationships between the FDIs and the environmental hazards. It is very important for the economists while making policies to ponder the republic level heterogeneity in order to see the underlying mechanism which affects the direct association between the FDIs and the CO2 emissions.
Sbia et al.  demonstrated that the FDIs in the Middle Eastern countries would make them consume more green energy and would result in emission of more CO2 which would deteriorate the environment two-fold, one in decreasing the green energy and second, increase the CO2 emission particularly, in United Arab Emirates (UAE). GCC countries also show similar relationships, but in the long – run, as there are no shreds of evidence of a affirmative rapport between the FDIs and CO2 emission in the petite track . Contrary to that, demonstrated that there is a uni-directional causal relationship between the FDIs and the CO2 emissions in the MENA countries, however, they had country-level differences in exhibiting the positive relationship between the FDIs and the CO2. The results are also mixed in the 6 sub-saharan countries , while in the case of Ghana , the FDI has a constructive influence on the emission level of CO2. These differences are attributed to the idiosyncratic nature of the individual countries which differ from each other radically, which is one of the main reasons for the mixed results in terms of the liaison between the FDIs and the emission of the CO2. These mixed experimental consequences about FDI and the environmental hazards also imply the prominence and seeing country-level peculiarities, which could serve as the catalyst for the environmental deterioration, which is the rationale to focus on the developing countries, where there are different countries which are radically different from each other and may respond to the FDIs differently as expected.
It is also worthy to contemplate the development stage, inter alia, of the country while assessing the impact of the FDIs on the environmental hazards, such as reported that FDI leads to a decreased level in the energy intensity; and argued that there may be new technological advancements in the country which could be the result of the FDIs in the country. However, in the case of the G-20 countries, there is no momentous connection between the CO2 and the FDIs . Similarly,  while considering the three different categories of countries such as low, medium and high-income nations also exhibited that FDI poses environmental hazards for the countries which support the pollution-haven hypothesis (PHH). To see the sectoral level differences in the OECD countries,  demonstrated that analysis on OECD countries, indicates that FDIs in the Fishing and Agricultural sectors has a negative effect on emission levels of CO2. In contrary to that, in a detailed and comprehensive study of 54 countries  highlighted that there is a reverse causality between the FDIs and the CO2, and the only exception to these results are the Europe and North Asia. Considering these contradictory findings in the existing literatures, it is the need of the time to conduct a detailed study to consider the regional – level data (considering the similarities between the countries in the region), as well as the country – level (Considering the heterogeneities among the countries) to see their differential effects on the FDI and CO2 relationships. Hence, we posit;
H1. Asian countries with a higher level of FDI have a low level of Environmental Degradation
FDI and Financial Development
It is a famous marvel that an increased level of FDI will result in an effective FD system . Theoretically, the nexus between the foreign direct inflow and the FD has been analyzed extensively in the early 1980s, for example,  examined the role of the FD of the country to encourage the FDI. They demonstrated and concluded that the antecedents of the FDIs are not related to the FD level of the country instead it is the necessary condition, not the sufficient one. As there are some other factors that are to be considered while assessing the effects of the FD levels of the country and the foreign direct inflows it receives. They further argued that the FD system is necessary but not a sufficient condition for a country to encourage foreign investment in the new technologies. It is also important to consider the financial liberalization while considering the role of the FD in attracting the FDI flows. However, the presence of financial liberalization limits the role of FD to attract more FDI inflows. Nevertheless, the studies abound, which established the positive relationships between the FD of the country and the FDIs it receives [36, 74]. These results imply that the more the financial markets are stable in the economy more are the more chances they received the FDIs to augment their EG while capitalizing on the prevalence of the strong financial markets indigenously.
There is an important and long debate on the role of the institutions in the performance of the financial markets and the EG of the country. For example,  argued that the institutions and the financial markets work hand to hand in the betterment of the economy, and emphasized on the role of the institutions, which ensures the performance of the financial markets. Similarly,  exhibited through a cross-country analysis, that FDIs affect positively the certain components of economic freedom, but not all of them. While considering these arguments, we considered thoroughly the roles of the other institutions such as the political risks which could be the important factor in affecting the relationship between the FD and the FDIs of any country. This could be due to the political instability which creates more uncertainty in the country and would be doubting the continuation of the policies of the incumbent governments. The literature is abundant with the cross-country research which are based on the data available internationally particularly about the impact of the policy-related factors such as the intellectual property protection (IPP), the prevalent corruption situations and both the institutional and non-institutional uncertainties posed to the country, on the FDI inflows  .
In addition, further numerous scholars have considered the effects of the autonomous associations on the FDI inflows, which is diverse in nature, for example, one strand of thoughts showed that the association between the FDI and the democratic institutions is positive [72, 79, 80]. Li and Resnick,  argued that though democratic rights have an indirect positive effect on the FDI inflows which could be attributed to the improvement in a specific dimension of the institutional improvements, particularly, by improving the property rights protection prevailing in the country, in these situations the direct impact on FDI is negative. Furthermore, political (in)stability like government (in)stability, rule of law, absence of the internal and the external conflicts, citizen’s basic democratic rights and an efficient law and order system, all together affects the FDI inflows . They further exhibited that the investors willing to invest their capitals are always susceptible to the un-anticipated variations in the political steadiness of a nation, these uncertainties and the un-anticipated changes in the national and international relations of the developing economies are very prominent. Although the developed countries are reasonably more stable as compared to the developing countries, the former still expect some other factors which could affect the FDIs . In these circumstances, the multi-disciplinary studies are more instructive and useful to consider. For example, according to law and finance-related literature, the institutions which are a source of satisfaction for the investors are considered more effective to predict the FDI, such as those institutions which provide investors a sense of protection have been proved crucial for FD of the economies because they attract more FDIs. According to Roe and Siegel , political stability shows a crucial role and major role in influential the country’s capacity to develop and prosper investment protection programs. They further argued that most of the time the politically unstable governments fail to believably obligate to the policies that could encourage and develop any entrepreneurial occupations and the protection of the financial markets. In this backdrop, it is easy to configure the role of the political stability in the studies aiming to examine the causal linkages between the financial markets, FD and the FDI inflows. Since these phenomena are more prevalent in the developing countries, it is very important to consider the developing countries to assess and examine the role of the financial markets, and FD stages on the FDI inflows. Therefore;
H2. Asian countries with a higher level of FDI have a high level of Financial Development
FDI and Economic Growth
To have a high EG and stable economic system, countries need sufficient resources, and especially in emerging economies, this goal can be achieved through FDI  because internal resources are not enough to boost the EG. Though, in the influential Harrod  and Domar  growth models, they considered the savings are the sources of the capital accumulation and the EG of the economies. Later on, Rostow  supported the view and provided the evidence regarding the claims and exhibited that savings are the essential elements required for the economies to boost their development. However, these savings are quite difficult to be raised in the short term, particularly for underdeveloped economies. In these backdrops, the leading economists from the International Monetary Fund (IMF) and the World Bank have clearly advised these underdeveloped economies to capitalize on the loaning facilities available from the other economies – specifically in the form of the portfolio investments, FDIs and the loans. These tools would be used to augment the internal savings which could be helpful in achieving the targeted EG rates determined by the countries, based on their internal resources. The regional leaders aim to develop their respective regions, and in these contexts, they compete for the FDIs through the provision of respective incentives, such as the tax incentives and other subsidies, which could attract the capitals from the international ventures and the international donors . Additionally, emerging countries were enticed into sustaining large foreign obligations, which sort it difficult for them to service and very often resulted in interference by the foreign powers by controlling their most valuable resources. These attributes make these investments not risk free, and sometimes threatens the sovereignty of the developing countries [87-89]. Herzer, Hühne, and Nunnenkamp  observed the noticeable inequalities in the developing economies from the FDIs, with causality from the FDIs to inequality. Rationalizing the flow of the funds from the developed economies to the developing economies, the new-classical economists [90, 91] argued that while considering the diminishing returns on the capitals in the developing economies would suggest the higher returns on the capitals, which further strengthen the arguments of the flow of the capital from the developed to the underdeveloped economies. This flow of capital would support the latter is catching up on the pace of the growth. These arguments further motivated the developing economies to attract more FDI to boost their economies. In contrast, the empirical results suggests other way around; such as Abramovitz  and Solow  demonstrated that the long-run growths are the results of the technological advancement, rather than the financial investment from the foreign sources. In addition, another contradiction was that the argument of the flow of capital from the rich to the poor economies was also overemphasized (e.g., [94, 95]. Neoclassical growth models suggested that the technological transfusion from foreign countries in the form of the FDI and other investments is the key to the development of the under-developed economies [96-99]. The proponents of the endogenous growth theory such as [100-102] challenged the exogenous growth theory of the Solow-Swan, by developing their arguments in favor of FDI, which could also be justified as a tool to transfer the technology from the developed to the under-developed economies, thereby, not only emphasizing the role of the technology, but also highlighting the importance of the FDI in supporting the transfer of the technology. The technology and the FDIs are the important factors in the improvement of the domestic productivity of the country . In these backdrops, it is still debatable whether the countries who are getting the FDIs really experience the proportionate amount of the technology transfer or not. There are studies, which still could not provide any proof of the progressive association between the FDI and the domestic total factor production of the sample of more than 100 countries (for example, [37, 103]. Therefore;
H3. Asian countries with a higher level of FDI have a high level of Economic Growth
Financial Development and Environmental Degradation
An effective FD can help the nation with a clean and quality environment . Hence, it is very important for a country to enjoy the fully functional and optimal financial market in order to achieve the desired level of environmental performance . However, sometimes, overemphasizing the financial markets only may overshadow the other important dimension of the overall economy, such as environmental and ecological development. It is unequivocally accepted across the globe, that there is a tradeoff between the EG and the energy consumption. Similarly, any form of investment and growth would result in high levels of energy consumption (for example see; [106-108]. However, further simplification of the situation would consider the emission of environmentally hazardous gases such as the CO2 while consuming natural energy. Different streams of research have considered these relationships between the FD of a country and the emission level of CO2 as a result of the energy consumption.
The first stream of research argues that the FD negatively affecting ED, such as the former is improving the environment by controlling the CO2 emission levels. While considering the BRICs countries Tamazian et al  examined the effects of FD and the EG on the emission levels of CO2 and demonstrated that there are fewer levels of the CO2 emission in the developed countries as compared to the less developed countries. In a similar vein, Tamazian and Rao  examined the effects of financial liberalization (a different economic phenomena than the FD), and found that in 24 transition economies financial liberalization plays a very important role in improving the quality of the environment by decreasing the emission levels of CO2, as compared to those who have no or less financial liberalization. Similarly, in China, there is a negative effect of the FD on the levels of CO2 emission . Shahbaz et al.  exhibited the negative relationship between the FD and the CO2 emission in Malaysia and South Africa. In Pakistan, the negative relationship between the FD and the CO2 emission is observed only during the periods of the high levels of liberalization and FD . In the latest study, the top-performing countries in the list of the Renewable Energy Attractiveness Index (REATI) exhibited a positive association between the FD levels and the environmental quality .
The second stream of research supports the idea of the adverse effects of the FD on environmental quality. They propagate that the FD causes more energy consumption, which ultimately results in the emission of high levels of CO2, which deteriorates the overall environment. For example, multiple studies exhibited and supported this assertion in different countries, such as in China  in Indonesia  however, taking different indicators of the FD, the results are different, such as while taking the bank-based development vs stock market – based financial market indicators. The bank-based FD, as well as stock market – based FD, have a negative association between the FD and the ED [115, 116]. However, more recently, Salahuddin et al.,  demonstrated a significant positive association between FDI, FD and CO2 emission in Kuwait.
Finally, the third stream of research which is indifferent as far as the association between the FD and the environmental deterioration is concerned and exhibited no association between these two. For instance, Ozturk and Acaravci  while examining the association between FD and the CO2 emission exhibited no association in the long-run in Turkey. Similarly, in 12 MENA countries, the association between these two is neutral , however, for 6 GCC countries, the results are mixed for association between the FD and the CO2 emission levels – such as the association is positive in Saudi Arabia, Kuwait, Bahrain and Oman; while there is negative association between FD and CO2 emission in Qatar and the United Arab Emirates. Furthermore, in a single country study, such as only focusing on UAE, there is an inverted-U association . However in the developed economies, the results are mixed, for example, in the 27 European Union countries, the results display not connection between the energy costs levels and the FD; while using the bank index, the association between the FD and the CO2 emission exhibited an inverted-U shaped association between them, however, insignificant relationship between them when they are assessed based on the stock-index . These results imply that not only the measurement of the FD is important while studying the effects of the FD on the environment, but also the country level heterogeneous characteristics are also important, which should be considered while assessing the association between the FD and the CO2 emission levels. Hence;
H4. Asian countries with a higher level of FD have a low level of Environmental Degradation
Economic Growth and Degradation of the Environment
A country needs an effective EG model that is required to degrade environmental pollution . There are myriad of the measurement tools available to gauge the EG of a country, but what is very often used, is the changes in the GDP, which is the gross domestic product of the country with reference to the previous year. Regardless of the measurement variation, the uniqueness lies in the phenomena is that it is a very important concern of the economies, particularly the macroeconomic planning and policy-making after the emergence of the capitalist economies after World War-II see,  for details. Policymakers are aimed to achieve consistent improvement in the GDP over time, but there are ways some costs associated with everything to be achieved in the international phenomena, and the GDP is no exception. Such as the consistent growth in the GDP may bring some negative changes to the overall situation of the country. For example, with more development which is the cornerstone of the GDP growth, there are more energy consumption and more natural resources consumption which creates an imbalance in the natural environment of the country. A major concern of the environmentalists is the environmental deterioration of the country, which is overshadowed by the GDP growth. Empirical evidence has abounded which examined the association between the GDP growth and the environmental deterioration of a country by capitalizing on the Environment Kuznets Curve (EKC) . Simon Kutz  argued that there is an inverted U shaped relationship between the GDP growth and the environmental deterioration, such as the GDP growth would deteriorates the environment in the long run, however, after reaching the peak of the GDP growth, which is very often gauged in terms of the per capita real GDP, it improves the environment by reducing the ED. This inverted U shaped relationship between the GDP growth and the environmental deterioration makes this association too complex to grasp it easily. This ambiguity is evident from the existing results on the relationship between the two variables, such as Apergis examined the association between the per capita GDP growth and the CO2 emission levels in 15 countries in a single study. The results satisfy the prevalence of relationships just like the environmental Kuznets Curve, while others gave some straightforward results. A single study incorporating the data from Brazil, China, Egypt, Japan, Nigeria, Mexico, South Africa and South Korea, showed that only South Korea and Japan showed the environmental Kuznets Curve. Further to that inverted U shaped curve, some of the countries exhibited an N-shaped curve between the GDP growth and the emission level of CO2. These differences in the relationships can be related to the different development stages of these countries, since they are heterogeneous as far as their economic development and GDP growth is concerned. Similarly, in a 43-country panel study (which included Middle Eastern and ASEAN countries) exhibited a positive association between the income levels of the household and the CO2 emission, however some countries showed totally different results despite the fact all of them were developing countries. The factors which contributes to the heterogeneity in the relationships between the GDP in the CO2 emission needs to be explored further in order to guide the policy makers in the right directions while formulating the policies for the achievement of the targets of the EG.
There are different comparative studies that considered the different sets of countries to see the relationships between the GDP and CO2 emission from the perspective of the different income levels. One such study considered 26 OECD economies which were characterized as having high levels of income on the one hand and another group of 52 emerging economies, which were having a low level of incomes . The results showed both the N-shaped and inverted N-shaped relationships between GDP growth and environmental deterioration. These results contradict the EKC hypothesis which is established by other authors in other sets of countries. These results suggest that environmental quality and conditions are not solely relying on the GDP growth of the countries, besides the differences in the countries warrants more insights into the relationships. The heterogeneity prevails in both scenarios such as i) when countries’ development stages are different, ii) when the countries’ development stages are not different. For example, a 27 advanced country panel study exhibited an inverted U-shaped relationship between the GDP growth and the environmental deterioration , while studies on the Chinese Region  and the US  showed mixed results about the establishing the environmental Kuznets Curve hypothesis. Considering all these disparities and the ambiguities in the association between the GDP growth, FD and the environmental deterioration, whether these differences prevail in the different groups of countries, such as developing versus developed countries, or are there some other factors which make them exhibit different pattern of relationship between the GDP growth and the environmental deterioration. In this context, the comparative studies while taking the countries in groups based on the developing and developed countries groups, which could ascertain the between-group and within-group differences in the relationship between the GDP growth and the environmental deterioration hypotheses. Hence,
H5. Asian countries with high EG growth have a low level of Environmental Degradation
The mediating role of FD and EG
FDI is the cornerstone of the EG of any country regardless of its development stage. FDI is undoubtedly a very important factor in the sustainability of developing countries. However, there may be some hazards caused by these FDIs, which could be more than the benefits it gives to any economy. Literature has claimed that FD is a significant predictor of ED . However, in the discussion, both negative[33, 34] and positive [28-30] results are discussed. It can give alarming signals that the relationship between FDI and ED is questionable. Soumaré and Tchana Tchana , for instance also claimed that care is needed to test and unleash the importance of FDI in financial market development and EG because it is ambiguous how it assists an economy in its development. In other words, considering the fragmented results (negative and positive), we perceive the relationship is something indirect. Taking the assumptions of Hu, Wang, Lian and Huang  who claimed that environmental regulation can affect the relationship between FDI and green technological progress. Similarly, Lan, Kakinaka and Huang  argued that the link between FDI and environmental pollution is affected in the presence of human capital. Furthermore, as Opoku, Ibrahim and Sare  claimed that FDI is a significant positive driver of EG that in turn can reduce ED [44, 123]. Favoring this notion, Kalai and Zghidi  claimed that FDI has a long-lasting favorable influence on EG and development that is beneficial for ED . Consequently, FDI is very essential for high EG and development  and such types of development can in turn significantly attenuate environmental pollution, environmental problems and ED [59, 111]. Additionally, an increased level of FDI will improve the distribution of private credit in a country. There will be adequate financial resources for business firms to participate in environmental activities. Because the lack of financial resources hampers the participation of business industries in environmental activities . Indeed, adequate financial resources are very fruitful for venture operational activities. If a venture receives satisfactory finance and capital in a country (e.g. from government, FDI or financial institutions), it will smooth its operational activities and will able to achieve sustainable competitive position  and in turn, there will be a strong possibility to participate in the environmental activities. As pointed out by Dutta and Roy , the inflow of FDI helps the economy to increase the ratio of public credit to the industrial sector. It reveals that FDI is a significant predictor of FD. Additionally, Otchere, Soumaré and Yourougou  revealed that FDI plays a backbone role in the productive sector and improves the production level of various industries because they receive adequate financial resources. In turn, FD significantly improves environmental quality . Sirag, SidAhmed and Ali  claimed that the relationship between FDI and economic performance is affected by FD in many nations. Hence, there will be effective strategies for the inflow of FDI in order to spur FD and EG because both are very crucial for environmental quality . So it is perceived that FDI will not directly influence ED but it will first enhance FD and EG that in turn will significantly influence ED.
H6. The path between FDI and ED is mediated by FD in Asian countries.
H7. The path between FDI and ED is mediated by EG in Asian countries.