Impact of Foreign Investment and Natural Resources Sharing Funds Against Environmental Degradation in Indonesia
This study examines the impact of foreign investment as a reflection of economic globalization and fiscal policy in the form of natural resource revenue sharing in development against environmental degradation, especially water in Indonesia. Using 33 provincial panel data during 2011-2015 with the basic model of EKC’s of cubic forms. The results explain that is a relationship between income and degradation that support the EKC hypothesis, but it not significantly. Foreign investment has a positive and significant impact on increasing degradation, while fiscal policy has a negative and not insignificant impact on reducing environmental degradation. Natural Resources Sharing Funds are not entirely used for environmental costs but are also used to provide basic infrastructure. The government needs to increase supervision of foreign capital, increase revenue sharing for natural resources and focus more on improving the environment.
Keywords: EKC, Foreign Invesmen, Sharing Funds Natural Resource, Water Degaradation.
 Asici, A. A (2013). Economic growth and its impact on environment: A panel data analysis. Ecological Indicators, vol 24, pp.324-333.
 Badan Pusat Statistik.(2016). Statistical yearbook of Indonesia.Jakarta: BPS-Statistics Indonesia.
 Barro, R. (1996). Determinant of Economic Growth A Cross-Country Empirical Study. Working Paper 5698, National Bureu of Economic Research, Cambride.
 Beckerman, W.(1992). Economic Growth and the Environment: Whose Growth? Whose Environment?. World Developmenr, Vol. 20, no. 4, pp.481-496.
 Bertinelli, L.,Strobi, E., Zou, B. (2008). Economic development and environmental quality: A reassessment n light of nature’s self-regenaration capacity. Ecological Economics, Vol 66, pp. 371-378.
 Bhattarai, M., Hammig, M. (2001). Institusiion and the Environmental Kuznet Curve for Deforestation: A Crosscountry Analysis for Latin America, Africa and Asia. World Development, Vol 29, no.6,pp. 995-1010.
 Boujan, S., Rongrong, Z., Ying, Z. (2011). Empirical Analysis of Tangshan Economic Growth and Environmental Pollution. Energy Procedia, vol 5, pp. 2392-2396.
 Burnett, J. W. (2009). Economic Growth and environmental Degradation. Association Anual Metting, southern Agricultural Economics, Atlanta, Georgia. Januari-31-Febr- 3.
 Capolupo, R.(2009). The New Growth Theories and Their Empirics after Twenty Years. Economics, vol 3,pp. 53-56.
 Coondoo, D., Dinda, S. (2002). Causality between income and emision: a country group-specific econometric analysis. Ecological Economomics, vol 40, pp. 351-367.
 Cole, M.A., Rayner, A.J., Bates, J.M. (1997). The environmental Kuznet curve: an empirical analysis. Environment and Development Economics, vol.2,pp. 401-416.
 Dasgupta, S., Laplante, B., Wang, H., Wheeler, D.(2002). Confronting the Environmental Kuznet Curve. Journal of Economic Perspectives,vol.16,no.1,pp.147-168
 Diao, X.D., Zeng, S.X., Tam, C.M., Tam, V.W.Y. (2009). EKC analysis for studying economic growth and environmental quality: a case study in China. Journal of Cleaner Production,vol.17,pp. 541-548.
 Dinda, S. (2004). Environmental Kuznet Curve Hypothesisi: A Survey. Ecological Economics, vol.49,pp. 431-455.
 Dinda, S., 2015. A Theoretical Basic for Green Growth. Munich Personal Repec Archive (MPRA), Paper no.63951.
 Granda, C., Munoz, L.G. P. J. (2008). The environmental Kuznet Curvefor Water Quality: An Analysis its appropriatenses Using Unit Root and Cointegration Tests. Universidad de Antioquia,pp. 221-244.
 Grossman, G, M., Krueger, A. (1995). Economic Growth and the Environment. The Quarterly Journal of Economics,vol.110,no.2,pp.353-377.
 Hakimi, A., Hamdi, H. (2016). Trade liberation FDI inflow, environmental quality and economic growth: A comparative analysis between Tunisia and Marocco.Renewable and Sustainable Energy Reviews, vol.58, pp.1445-1456.
 Halkos, G., Paizanos, E A. (2013). The effect of goverment expenditure on the environment: An empirical investigation. Ecological Economics,vol.91,pp. 48-56.
 Kangkang, G., Jingshuang, L., Yang, W. (2009). Relationship Between Economic Growth and Water Environmental Quality of Anshan City in Northeast China. Chin Geogra.Sci, vol.19,no. 1,pp. 017-024.
 Kasman, A., Duman, Y.S. (2015). CO2 Emission, economic growth, energy consumtion, trade, and urbanization in new EU member and candidate countries: a Panel data analysis. Economi Modeling,vol.44,pp. 97-103.
 Kijima, M., Nishide, K., Ohyama, A. (2010). Economic models for the environmental Kuznet cirve: Survey. Journal of Economic Dynamics & Control,vol.34,pp. 1187-1201.
 Kementrian Lingkungan Hidup dan Kehutanan.(2015). Statistical yearbook of Ministry of Environment and Forestry. Jakarta. Central of Data and Information, Ministry of Environment and Forestry.
 Kuznet, S., 1955. Economic Growth and Income inequality. The American Economic Review vol.45,no.1,pp. 1-28.
 Lim, J.(1997). Economic Growth and Environment: Some Empirical Evidences from South Korea. School of Economics, Australia: University of New South Wales Sydney, NSW 2052,.
 Mankiw, G. N. (2007). Principle of Economics. Fourth Edition, the Thomson Corporation: Thomson South-Western,
 Mohapatra, G., Giri, A.K. (2009). Economic Development and environmental quality: an econometric study in India. Management of Environmental Quality: An International Journal, vol.20,no. 2,pp.175-191.
 Orubu, O.,Omotor, D G. (2011). Environmental quality and economic growth: searching for environmental Kuznet curve for air and water pollutan in Afrika. Energy Policy 39, 4178-4188.
 Peng, S., Wu, N., Zhao, G. (2014). Modeling environmental degradation and economic growth of Henan Provinci in recent 25 years. Applied Mechanics and Material, vol.675-677, pp.1810-1814.
 Panayotou, T., 2003. Economic Growth and The Environment. Genewa, United Nation Economic Commission for Europe.
 Roca, J., Padilla, E., Farre, M., Galletto, V. (2001). Economic growth and atmospheric pollution ins Spain: discussing the environmental Kuznets curve hypotesis. Ecological Economics,vol.39, pp. 85-99.
 Samuelson, P.A., Nordhaus, W.D., (2005). Economics. Mc Graw-Hill. Companies, Inc.
 Shahbaz, M., 2013.Does financial instability increase environmental degradation? Fresh evidence from Pakistan. Economic Modeling 33, 537-544.
 Shafik, N., & Bandyopadhyay, S.(1992). Economic Growth and environmental Quality: Time series and Cross-Country Evidence. World Bank, Working Paper, World Development Report,
 Shafik, N. (1994). Economic Development and Environmental Quality: An Econometric Analysis. Oxford Economic Paper,vol 46,pp. 757-773
 Stern, D I., Common, M. S., Barbier, E. B. (1996). Economic Growth and environmental Degradation: The Environmental Kuznet Curve and Sustainable Development. World Development, vol.24, no.7,pp. 1151-1160.
 Taguchi, H. (2012). The Environmental Kuznet Curve in Asia: The Case of Sulphur and Carbon Emissions. Asia-Pacific Development Journal, vol.19,no.2,pp.77-92.
 Torras, M., Boyce, J.K.(1998). Income, inequality, and Pollution: reassessment of the environmental Kuznet Curve. Ecological Economic, vol.25,pp. 147-160.
 Uchiyama, K. (2016). Environmental Kuznets Curve Hypothesis. Development Bank of Japan Research Series, DOI 10.1007/978-4-431-55921-4-2.
 UNDP. (2016). Sustainable Management of Water and Sanitation.New York: UNDP
 Wheeler, D. (2000). Racing to the Bottom? Foreign Invesment and Quality in Developing Countries. USA: Development Research Group, World Bank.
 World Bank. (1992). Development and the Environment, World Development Report.
 Wu, P.I.,1998. Economic Develoment and Environmental Quality: Eviden from Taiwan. Asian Economic Journal,vol.12,no.4,pp. 395-413.
 Xu, X. (2014). The Research on Temporal Spatial Econometric Analysis of Environmental Quality and Economic Growth. Advanced Materials Research, Vol. 926-930, pp.4398-4401