Impact of foreign direct investment on CO2 emissions: the case of Tajikistan

Abstract

Employing the cointegration procedure and time series data covering the years 1990–2020, this investigation investigates the effect of foreign direct investment inflows on carbon dioxide emissions in Tajikistan in order to test the veracity of the pollution paradise theory. Our conclusion that the variables are cointegrated is supported by the bivariate cointegration study. In addition, the outcomes of ordinary least squares (OLS) estimators demonstrate that foreign direct investment (FDI) has a favorable long-term association with carbon dioxide emissions. The Engle-Granger causality test results, on the other hand, show that both short- and long-term carbon dioxide emissions are increased by foreign direct investment inflows. So, it stands to reason that although filthy industries initially abide by environmental laws and norms, with time they too start to pollute. It is advised to keep luring these applicants while setting up systems and tools to lessen carbon dioxide emissions under the confines of strict environmental regulations.