Bootstrap ARDL Test on the Relationship among Trade, FDI, and CO 2 Emissions: Based on the Experience of BRICS Countries

We used the Bootstrap Autoregressive Distributed Lagged Model (ARDL) method to test the relationship among BRICS (Brazil, Russia, India, China, and South Africa) countries’ trade, foreign direct investment (FDI), and CO 2 emissions. We found that Brazil’s CO 2 emissions and FDI have a cointegration relationship with the trade on the lag of one-period. Russia and India and CO 2 emissions and trade have a cointegration relationship with FDI on the lag of one-period. In the long-term, Brazil’s FDI has a long-term causal relationship with the trade on the lag of one-period. The trade between Russia and India has a long-term causal relationship with FDI on the lag of one-period. Among other BRICS variables, Russian trade and FDI on the lag of one-period of CO 2 emissions and FDI and CO 2 emissions are on the lag of one-period on trade, which McNown et al. mentioned is the degeneration case #1 in their paper; while China’s trade and FDI on the lag of one-period of CO 2 emissions is the country of degeneration case #2. When we examined short-term causality, we found that CO 2 emissions showed a causal relationship with trade, while FDI and CO 2 emissions were less pronounced. Trade has a positive causal relationship with FDI. These variables are different in different situations and in different countries. These results should be related to BRICS countries’ FDI, international trade development, and their different CO 2 emission policies.