Abstract
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 CO2 emissions. We found that Brazil’s CO2 emissions and FDI have a cointegration relationship with the trade on the lag of one-period. Russia and India and CO2 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 CO2 emissions and FDI and CO2 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 CO2 emissions is the country of degeneration case #2. When we examined short-term causality, we found that CO2 emissions showed a causal relationship with trade, while FDI and CO2 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 CO2 emission policies.
Highlights
Since the financial crisis in 2008, the growth of the global economy has slowed sharply, and the economic growth of major developed countries has been weak; the BRICS countries are still the group with the greatest economic potential at present
Each Autoregressive Distributed Lagged Model (ARDL) equation passes all diagnostic tests for autocorrelation, non-normality, and heteroscedasticity
F1*, F2*, and t* refer to a critical value of the 0.10 significance level, generated by the Bootstrap ARDL procedure proposed by McNown et al [38]
Summary
Since the financial crisis in 2008, the growth of the global economy has slowed sharply, and the economic growth of major developed countries has been weak; the BRICS countries are still the group with the greatest economic potential at present. The rapid development of economic globalization has led to the rapid growth of international trade and has led to a sharp increase in global greenhouse gas emissions. Its membership is limited to those of the World Meteorological Organization and the United Nations Environment Program), in 2019 [2], globally, economic growth and population growth continue to be the two most important drivers of increased carbon dioxide (CO2) emissions due to fossil fuel combustion. For the BRICS countries, FDI and international trade have injected strong momentum into economic growth, but with global warming, these emerging economies are experiencing increasing pressure from public opinion, under the open economy
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