This study examines the asymmetric environmental effects of foreign direct investment (FDI) and income growth in Bulgaria, linking the analysis to broader globalization debates on the ecological consequences of cross-border capital flows. Using quarterly data from 2014Q1 to 2024Q2 and a nonlinear autoregressive distributed lag (NARDL) model, we assess how sector-specific FDI in manufacturing and construction affects per capita CO 2 emissions. By decomposing FDI and GDP per capita into positive and negative shocks, we test whether globalization-driven inflows and income expansions support low-carbon development. The results indicate a long-run “pollution halo” effect, with rising FDI and income reducing emissions, while contractions in income elevate them. In contrast, short-run dynamics point to temporary “pollution haven” patterns. These findings underscore the dual role of globalization: cross-border investment can initially intensify environmental pressures but, under robust regulatory frameworks, fosters technological upgrading and green transitions. The study contributes to globalization research by offering asymmetric, sector-specific evidence from an emerging industrial EU economy with a peripheral role in global value chains.
Zhelev et al. (Sun,) studied this question.