Measuring Global FDI-Embodied Carbon Emissions

Yuanyuan Li, Yonghua Li, Yuan Shi, Peng Wang and Yun Zhang

Emerging Markets Finance and Trade, 2025, vol. 61, issue 6, 1596-1613

Abstract: Foreign direct investment (FDI) significantly impacts global carbon emission patterns through the production and supply chains of transnational corporations (TNCs), influencing climate change governance. This study measures FDI-embodied carbon emissions from 2000 to 2019, using multi-regional input-output and hypothetical extraction methods, and analyzes changes via complex network analysis. Findings reveal a 61% increase in global FDI-embodied carbon emissions, with an upward trend since 2016, mainly due to developing countries. The 2008 financial crisis and Copenhagen Accord shifted carbon flows from concentrated to decentralized patterns. Clustering of these flows continues to rise. Strengthened international cooperation and guidelines are needed to promote green investment, guide TNCs, and achieve the Paris Agreement goals.

Date: 2025
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DOI: 10.1080/1540496X.2024.2422970

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