Analyzing the Impact of Energy, Export Variety, and FDI on Environmental Degradation in the Context of Environmental Kuznets Curve Hypothesis: A Case Study of India

Tijjani Adamu,Muhammad Shafiq,Ihtisham Haq

doi:10.3390/en12061076

Abstract

The economic size of the Indian economy and its status as one of the major global emitters of carbon emissions makes the country a good place to study the determinants of environmental degradation in India. The study aims at analyzing the impact of energy, export variety, and foreign direct investment (FDI) on environmental degradation in India in the context of environmental Kuznets curve (EKC) hypothesis. The long run relationship was found between variables of the study through a cointegration test, whereas long run estimates were obtained through cointegration and dynamic ordinary least squares (DOLS). Results of the study reveal that energy consumption, export variety, FDI, and income positively contributed to environmental degradation in India. Results also unveil that the EKC hypothesis does not exist in India. Causality analyses document unidirectional causality from income and FDI to environmental degradation, and bidirectional causality was witnessed between energy consumption and environmental degradation and between export variety and environmental degradation in the long run. The long run and the short run causality highlight that India has to forego the short run economic growth in order to improve its environmental quality and reduce global carbon emissions; however, it will not affect its long term economic development process.

Highlights

The degradation of environmental quality is one of the causes of global warming and climate change
This study explores the relationship between carbon emissions, energy consumption, export variety, foreign direct investment (FDI), and income for the Indian economy
The cointegration test confirms the long run relationship between variables of the study, income, energy consumption, FDI, and export variety are the determinants of environmental degradation in

Summary

Introduction

The degradation of environmental quality is one of the causes of global warming and climate change. Global warming and climate change have adverse effects on economy, cropping pattern, food security, and livelihoods. Human activities contaminate the environment, which could lead to morbidity, malnutrition, and shortening of life spans. For these genuine issues, global warming and climate change are core issues for researchers and policy makers around the globe. The international community has concern for environmental degradation as well, but it only focuses on the activities or emissions responsible for global warming and climate change. The emissions of greenhouses gases (GHG) have implications for global warming, climate change, and ecological imbalances. There has been a continuous increase in GHG and carbon emissions, which constitute a major portion of Energies 2019, 12, 1076; doi:10.3390/en12061076 www.mdpi.com/journal/energies

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Conclusion