FDI, Growth and the Environment: Impact on Quality of Life in Malaysia

Environmental pollution is an important issue in the process of economic growth. The deterioration of environment begins to have direct impact on the quality of human life, or even a threat to the survival of mankind. This paper is aimed at investigating the two most important benefits and costs of foreign direct investment (FDI) in the Malaysian context that is Gross Domestic Product (GDP) growth and the environmental degradation. The non-linear model examines the relationship between foreign direct investment and environmental degradation in Malaysia during 1965 to 2010. The results indicated that environmental Kuznets curve exists and foreign direct investment increases environmental degradation.