Fossil fuels, foreign direct investment, and economic growth have triggered CO2 emissions in emerging Asian economies: Some empirical evidence

Abstract

The present study examines the long-run and short-run impacts of fossil fuels consumption, foreign direct investment and economic growth on carbon emissions in fifteen developing Asian countries. Our empirical evidence analyses panel data for the period from 1990 to 2013, and it applies an Autoregressive Distributive Lag (ARDL) model. Our results show that in these developing economies, the efforts to foster economic growth are contributing to the generation of CO2 emissions, and that fossil fuels consumption is contributing to carbon emissions and to the deterioration of the environment at the regional level. Moreover, the empirical results spotlight that foreign direct investment is a source of environmental degradation that increases carbon emissions at the domestic level, confirming the Pollution Haven hypothesis. Furthermore, our data confirms the existence of an Environmental Kuznets Curve (EKC) in these developing Asian countries. Finally, our study suggests that reducing the consumption of fossil fuels and fostering an environmentally friendly economic growth strategy in these developing countries will prove helpful for the well-being of this part of the developing world.