Balancing Growth and Sustainability: Foreign Direct Investment, Renewable Energy, and Environmental Quality in OECD Economies
DOI:
https://doi.org/10.47067/ramss.v8i1.432Keywords:
CO2, Foreign Direct Investment, Natural Resources, Urbanization, Panel ARDLAbstract
This study focuses on the roles of foreign direct investment (FDI), renewable energy, urbanization, natural resources, and gross domestic product (GDP in environmental degradation in 38 OECD countries. This study uses panel ARDL covering data 1998-2023. The results from the Panel ARDL model indicate that FDI, natural resources, and GDP have a positive impact on CO2 emissions, supporting the Pollution Haven Hypothesis, which describe that countries with negligent environmental principles attract pollution-intensive industries. Renewable energy and urbanization negatively impact CO2 emissions means cleaner technologies and efficient urban planning moderate environmental degradation. The positive impacts of both GDP square and GDP cube on CO2 emissions in models suggest an N-shaped relationship, indicating that while initial economic growth increases emissions. This points to complex dynamics where higher economic development can lead to recurring cycles of environmental degradation rather than a simple inverted U-shaped EKC.
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