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The linkage between carbon emissions, foreign direct investment, economic growth, and gross value added

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  • Devesh Singh

    (University of Delhi, University Enclave)

  • Sunil Kumar Dhiman

    (University of Delhi, University Enclave)

Abstract

This study investigates the interrelationships between carbon emissions, foreign direct investment (FDI), economic growth, and gross value added (GVA) in agriculture, service, manufacturing, and resource-extensive industries, including the construction sector. We classified European regions into four-panel groups, Eastern Europe (EE), Southern Europe (SE), Northern Europe (NE), and Western Europe (WE). A 3SLS (three-stage least squares) simultaneous equation estimation was performed to cheque the causality between the four European panel groups using World Bank data from 2000 to 2018. This study further discusses the challenges technologically rich economies face in growing industrialisation when formulating policies to reduce CO2 emissions. The results show that the causality among the variables, carbon emissions, economic growth, FDI, and all four sectors of GVA varies according to the region. This study indicates that CO2 emissions have bidirectional causality with the GVA output in all four industrial sectors.

Suggested Citation

  • Devesh Singh & Sunil Kumar Dhiman, 2023. "The linkage between carbon emissions, foreign direct investment, economic growth, and gross value added," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 13(1), pages 156-176, March.
    • Handle: RePEc:spr:jenvss:v:13:y:2023:i:1:d:10.1007_s13412-022-00809-2
    DOI: 10.1007/s13412-022-00809-2
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