The roles of foreign direct investments, economic growth, and capital investments in decarbonizing the economy of Oman.

Abstract

Oman is a Middle Eastern country that has traditionally been monotonically reliant on itsindigenous fossil fuel supplies. Besides, the nation has also been a surplus producer and net exporter of oil which further highlights the prolonged fossil fuel dependency of Oman. Consequently, despite flourishing economically, environmental quality in Oman has persistently aggravated. These opposing economic and environmental performances have necessitated Oman to identify the factors which canenable Oman to decarbonize its economy for tackling the environmental concerns faced by the nation. Against this backdrop, this study aims to examine the symmetric and asymmetric effects of foreign direct investments, economic growth, and capital investments on carbon dioxide emissions in Oman during 1980-2019. Using relevant econometricestimation methods for controlling structural break concerns in the data, the findings reveal evidence of asymmetric environmental impacts associated with shocks to the nation's foreign direct investment inflow, economic growth, and capital investment figures. Specifically, it is witnessed that positive shocks to thelevels of foreign direct investment inflows, economic growth, and capital investments boost carbon dioxide emissions both in the short and long run. On the other hand, negative shocks to the levels of foreign direct investment inflows and economic growth are witnessed toreduce the emissions. Besides, the findings also validate the environmental Kuznets curve and pollution haven hypotheses in the context of Oman. Hence, considering these key findings, it is recommended that Omanshould ideally pursues green economic growth policiesby restricting inflows of unclean foreign direct investments and green its financial sector in orderto collectively minimize itscarbon dioxide emissionfigures.