How sustainable environment is influenced by the foreign direct investment, financial development, economic growth, globalization, innovation, and urbanization in China.

Abstract

This study aims to investigate the impact of foreign direct investment (FDI) inflow, financial development, economic growth, globalization, innovation, and urbanization on the carbon dioxide emissions in China by using long-ran time series dataset from 1970 to 2021 which for the first time used the newly developed dynamic autoregressive distributed lags (ARDL) simulation model for results analysis. Dynamic ARDL simulation model removes the shortcomings of the traditional ARDL models by predicting the actual change (positive and negative shocks) in the independent variables and its impact on the main dependent variables by 5000 simulations through graphical representation. The findings of the long-run dynamic ARDL simulations indicate that FDI inflow, globalization, and innovation negatively and significantly impact the environmental degradation while financial development, economic growth, and urbanization cause to increase the environmental degradation in China. Recommendations are suggested based on the findings of this study.