The link between urbanization, energy consumption, foreign direct investments and CO₂ emanations: An empirical evidence from the emerging seven (E7) countries

Abstract

This study investigated the link between energy consumption (EC), foreign direct investments (FDI), urbanization (URB) and CO2 emissions in the emerging seven (E7) countries for the period 1991 to 2014. The exploration made a methodological contribution by employing modern econometric methods that are robust to the issues of cross-sectional dependence and slope heterogeneity, so as to obtain valid and reliable outcomes. From the results, the panel under consideration was heterogeneous and cross-sectionally correlated. Also, the series were first differenced stationary and cointegrated in the long-run. The DCCEMG and the DCCEPMG estimators were engaged to explore the long-run elastic effects of the covariates on the response variable, and from the results, EC and URB were key promoters of CO2 effusions in the countries. However, FDI mitigated the emanation of CO2 in the nations. Additionally, economic growth (GDP) and population growth (POP) escalated the emittance of CO2 in the E7. On the D-H causality test outcomes, a feedback causality amid POP and CO2 effusions; GDP and CO2 excretions; FDI and CO2 emissivities; and between URB and CO2 secretions were discovered. Finally, a one-way causation from URB to the effluents of CO2 was unfolded. Based on the verdicts, policy suggestions were proposed to help abate the rate of CO2 exudations in the countries.

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