Abstract:
The aim associated with the present study is to examine the sector-specific foreign direct investment and CO2
emissions. This study employs panel
Granger causality tests to investigate the association between sector-specific foreign direct investment and CO2
emissions. Using a sample of 5 ASEAN
countries for the period of 1980-2018, we find causality running from foreign direct investment in polluting intensive industries (“the dirty sector”) to
CO2
emissions per capita. This result is robust to controlling for other factors associated with CO2
emissions and using the ratio of CO2
emissions to
GDP. For other sectors, we find no robust evidence that FDI causes CO2
emissions. These findings are suitable for the regulation making authorities
while developing the regulation related to the FDI and carbon emissions. This study provides the guidelines to the upcoming studies who wants to
investigate this area in the future and suggested that upcoming studies should add other that FDI factor to investigate the carbon emissions.
