The linkage between carbon emissions, foreign direct investment, economic growth, and gross value added

Devesh Singh () and Sunil Kumar Dhiman ()
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Devesh Singh: University of Delhi, University Enclave
Sunil Kumar Dhiman: University of Delhi, University Enclave

Journal of Environmental Studies and Sciences, 2023, vol. 13, issue 1, No 13, 156-176

Abstract: Abstract This study investigates the interrelationships between carbon emissions, foreign direct investment (FDI), economic growth, and gross value added (GVA) in agriculture, service, manufacturing, and resource-extensive industries, including the construction sector. We classified European regions into four-panel groups, Eastern Europe (EE), Southern Europe (SE), Northern Europe (NE), and Western Europe (WE). A 3SLS (three-stage least squares) simultaneous equation estimation was performed to cheque the causality between the four European panel groups using World Bank data from 2000 to 2018. This study further discusses the challenges technologically rich economies face in growing industrialisation when formulating policies to reduce CO2 emissions. The results show that the causality among the variables, carbon emissions, economic growth, FDI, and all four sectors of GVA varies according to the region. This study indicates that CO2 emissions have bidirectional causality with the GVA output in all four industrial sectors.

Keywords: CO2 emission; Foreign direct investment; FDI; Gross value added; Economic growth; Four-way linkage; Service sector; Manufacturing sector; Agriculture sector; Mining and natural resources; Europe; Western Europe; Northern Europe; Southern Europe; Eastern Europe (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s13412-022-00809-2

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