Journal of Environmental Protection, 2023, 14, 903-918 https://www.scirp.org/journal/jep ISSN Online: 2152-2219 ISSN Print: 2152-2197 DOI: 10.4236/jep.2023.1411050 Nov. 27, 2023 903 Journal of Environmental Protection The Effect of Foreign Direct Investment on Air Pollution in the Economic Community of West African States Region: What Influence Does Tax Expenditure Have? Symphorien Zogbassè 1 , Ahouidji Tanguy Agbokpanzo 1 , Kuessi Prince Houssou 1* , Tiburce André Agbidinoukoun 2 , Alastaire Sèna Alinsato 1 1 Public Economics Laboratory (LEP), University of Abomey-Calavi (UAC), Abomey Calavi, Benin 2 Western Economy and Management Laboratory (LEGO), University of Western Brittany (UBO), Brest, France Abstract Air pollution is one of the crucial environmental challenges facing the coun- tries of the Economic Community of West African States (ECOWAS). The objective of this paper is to examine the effect of an attractive tax policy on the relationship between Foreign Direct Investment (FDI) and air pollution in ECOWAS region over the period 2000 to 2019. By using the Ordinary Least Squares (OLS) method and panel data analyses (fixed effects and ran- dom effects), the results show that, in general, FDI does not have a significant effect on air pollution in the region. However, closer analysis reveals that an interaction between FDI and an attractive tax policy has a negative effect on air quality, leading to an increase in air pollution. Thus, companies attracted by tax incentives may not meet rigorous environmental standards. These re- sults highlight the importance for policymakers to balance economic incentives with environmental protection in ECOWAS. Attractive tax policies can stimu- late investment, but they must be designed in a way that encourages environ- mentally friendly practices, thereby helping to improve air quality in the region. Keywords Air Pollution, Foreign Direct Investment, Attractive Tax Policy, Ordinary Least Squares, Rendom Effects 1. Introduction Globalization is considered both a factor of economic prosperity and a source of How to cite this paper: Zogbassè, S., Ag- bokpanzo, A.T., Houssou, K.P., Agbidi- noukoun, T.A. and Alinsato, A.S. (2023) The Effect of Foreign Direct Investment on Air Pollution in the Economic Community of West African States region: What Influ- ence Does Tax Expenditure Have? Journal of Environmental Protection, 14, 903-918. https://doi.org/10.4236/jep.2023.1411050 Received: October 4, 2023 Accepted: November 24, 2023 Published: November 27, 2023 Copyright © 2023 by author(s) and Scientific Research Publishing Inc. This work is licensed under the Creative Commons Attribution-NonCommercial International License (CC BY-NC 4.0). http://creativecommons.org/licenses/by-nc/4.0/ Open Access