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Analyzing the Impact of Energy, Export Variety, and FDI on Environmental Degradation in the Context of Environmental Kuznets Curve Hypothesis: A Case Study of India

Tijjani Musa Adamu (), Ihtisham ul Haq () and Muhammad Shafiq ()
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Tijjani Musa Adamu: College of Economics and Trade, Hunan University, Changsha 410082, China
Ihtisham ul Haq: Department of Economics, Kohat University of Science & Technology, Kohat 26000, Pakistan
Muhammad Shafiq: Institute of Mathematical Sciences, Kohat University of Science & Technology, Kohat 26000, Pakistan

Energies, 2019, vol. 12, issue 6, 1-18

Abstract: The economic size of the Indian economy and its status as one of the major global emitters of carbon emissions makes the country a good place to study the determinants of environmental degradation in India. The study aims at analyzing the impact of energy, export variety, and foreign direct investment (FDI) on environmental degradation in India in the context of environmental Kuznets curve (EKC) hypothesis. The long run relationship was found between variables of the study through a cointegration test, whereas long run estimates were obtained through cointegration and dynamic ordinary least squares (DOLS). Results of the study reveal that energy consumption, export variety, FDI, and income positively contributed to environmental degradation in India. Results also unveil that the EKC hypothesis does not exist in India. Causality analyses document unidirectional causality from income and FDI to environmental degradation, and bidirectional causality was witnessed between energy consumption and environmental degradation and between export variety and environmental degradation in the long run. The long run and the short run causality highlight that India has to forego the short run economic growth in order to improve its environmental quality and reduce global carbon emissions; however, it will not affect its long term economic development process.

Keywords: carbon emissions; energy consumption; export variety; FDI; India; income (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2019
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