The Dynamic Interrelationship of Environmental Factors and Foreign Direct Investment: Dynamic Panel Data Analysis and New Evidence from the Globe

Abstract EN

Studies on the role of renewable energy consumption and other environmental factors in carbon emission have got considerable attention recently, and they are predicted to get exaggerated in the coming decades.

Energy usage increases economic growth and development of a country and backs to global warming and carbon emission which affect the local environment.

For the prosperity of a country, it is felt crucial to measure the unavoidable impacts which effect environmental quality.

Consequently, the current study investigates the interrelationship of renewable energy consumption, carbon dioxide emission, foreign direct investment, and economic growth in 190 countries of the world for the period of 1980 to 2018.

By employing both static and dynamic models, the findings indicate that carbon emission, renewable energy consumption, foreign direct investment, and economic growth affect each other significantly whereas renewable energy consumption has been found beneficial for environmental quality; however, it decreases the inflow of FDI.

RE has a decreasing impact, while FDI and carbon emission promote economic growth.

The study suggests the promotion of renewable energy resources and policies related to FDI to promote the quality of the environment and achieve economic growth as well.