Assessing the effects of fuel energy consumption, foreign direct investment and GDP on CO2 emission: New data science evidence from Europe & Central Asia

Abstract

Environmentalists and scientists are agreed that the rapid growth of the global economy and human activities has become the reason for the environmental deterioration. The typical energy resources like fossil fuels are considered ecological devastation factors. This research investigates the relationship between a sustainable environment and economic growth in the European and Central Asian Countries by using yearly data series from 1971 to 2016. The ARDL approach is used to determine the short and long-run relationship among the selected set of variables. The CO2 emission represents environmental sustainability while energy consumption, personal remittances, GDP, and FDI are independent variables and archetypal of economic growth. The CO2 emission is the Granger cause of GDP while energy consumption and FDI Granger cause CO2 emission. The results confirm long and short-run relationships among variables. Conclusively, a significant negative relationship for the long run and a positive relationship for the short-run between CO2 emission and GDP authorizes the worsening of environmental sustainability is because of economic growth for a longer term. By analyzing data series and determining their impact on the environment, this research suggested that the adaptation of the green resource is necessary for the individual sector of the economy sooner rather than later to maintain the environment for the living being. This research will be a healthy contribution to the discussion of green growth and help policymakers establish the normative ground for economic sectors to contribute to environmental sustainability.