Sectorial Analysis of Foreign Direct Investment and Trade Openness on Carbon Emissions: A Threshold Regression Approach

Mihir Mishra (), Debadatta Das (), Algimantas Laurinavicius (), Antanas Laurinavicius () and Bisharat Hussain Chang
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Mihir Mishra: Civil and Environmental Engineering, Texas A&M University, College Station, Dallas, United States of America
Debadatta Das: Department of Commerce, Business School Koneru Lakshmaiah Education Foundation, Vaddeswaram, Andhra Pradesh – 522302, India
Algimantas Laurinavicius: Department of Finance, Faculty of Economics and Business Administration, Vilnius University, Vilnius, Lithuania
Antanas Laurinavicius: Department of Finance, Faculty of Economics and Business Administration, Vilnius University, Vilnius, Lithuania
Bisharat Hussain Chang: Department of Business Administration, Sukkur IBA University, Sukkur, Sindh, Pakistan

Journal of International Commerce, Economics and Policy (JICEP), 2025, vol. 16, issue 01, 1-21

Abstract: Prior studies focused on the relationship between foreign direct investment (FDI), carbon emissions, and trade openness; however, previous investigations have yet to explicitly look at carbon emissions using data at the sector level. Using the threshold regression technique and the concentration of carbon emissions as the main indicator, this research adds to the body of knowledge by examining the sector-level impacts of FDI and trade openness on carbon emissions. Our results show that the effect depends on the selected thresholds, highlighting the effects of FDI and trade openness on carbon emissions in the industrial area. The influence coefficient of FDI on carbon emissions in industries particular to a specific sector varies over time. Conversely, carbon emissions are affected by trade openness both favorably and unfavorably. More specifically, in less carbon-intensive industries the, lack of carbon emissions results from greater international trade openness. Within industrial sectors, carbon emissions are heavily influenced by variables including GDP per capita, employment levels, autonomous technical invention, and the intensity of economic movement.

Keywords: Foreign direct investment; threshold impact threshold regression; foreign trade openness (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S1793993325500036

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