Investigation of Pollution Haven Hypothesis in Iran: Application of the ARDL Model with Breakpoint Unit Root Tests

In this study, to investigate and test Pollution Haven Hypothesis (PHH) in Iran, using the two indexes flow of foreign direct investment and economic openness has been studied in two models. In this study, the effects of foreign direct investment, GDP, energy consumption, openness of economy and urbanization percent variables on carbon dioxide emissions (CO2) as an indicator of environmental quality, in the form model of an Autoregressive Distributed Lag Cointegration (ARDL) using data from the years 1971-2015 have been investigated. The distinction of this research with other studies on environmental issues using time series data in Iran, the structural break of variables is considered. The results showed that there is a positive and significant relationship between economic growth, energy consumption and urbanization percent and environmental pollution. Also, the environmental Kuznets hypothesis has also been confirmed. Foreign direct investment variable, despite having a positive impact on CO2 emissions is not statistically significant. Therefore, based on this variable, Pollution Haven Hypothesis is not true. But the effect of the index of openness of the economy on the on carbon dioxide emissions per capita is positive and significant and the PHH does exist in Iran.