Causal interactions between CO2 emissions, FDI, and economic growth: Evidence from dynamic simultaneous-equation models

Omri, Anis and Nguyen, Duc Khuong and Rault, Christophe (2014): Causal interactions between CO2 emissions, FDI, and economic growth: Evidence from dynamic simultaneous-equation models. Published in: Economic Modelling , Vol. 42, (6 August 2014): pp. 382-389.

Abstract

In this article, we investigate the causality links between CO2 emissions, foreign direct investment, and economic growth using dynamic simultaneous-equation panel data models for a global panel of 54 countries over the peri-od 1990–2011. We also implement these empirical models for 3 regional sub-panels: Europe and Central Asia, Latin America and the Caribbean, and the Middle East, North Africa, and sub-Saharan Africa. Our results pro-vide evidence of bidirectional causality between FDI inflows and economic growth for all the panels and be-tween FDI and CO2 for all the panels, except Europe and North Asia. They also indicate the existence of unidi-rectional causality running from CO2 emissions to economic growth, with the exception of the Middle East, North Africa, and sub-Sahara panel, for which bidirectional causality between these variables cannot be rejected. These empirical insights are of particular interest to policymakers as they help build sound economic policies to sustain economic development.

• Item Type: MPRA Paper
• Language: English
• Keywords: CO2 emissions, FDI inflows, economic growth
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling; C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture ; Natural Resources ; Energy ; Environment ; Other Primary Products

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