The link between urbanization, energy consumption, foreign direct investments and CO 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 CO 2 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 CO 2 effusions in the countries. However, FDI mitigated the emanation of CO 2 in the nations. Additionally, economic growth (GDP) and population growth (POP) escalated the emittance of CO 2 in the E7. On the D-H causality test outcomes, a feedback causality amid POP and CO 2 effusions; GDP and CO 2 excretions; FDI and CO 2 emissivities; and between URB and CO 2 secretions were discovered. Finally, a one-way causation from URB to the effluents of CO 2 was unfolded. Based on the verdicts, policy suggestions were proposed to help abate the rate of CO 2 exudations in the countries.