Empirical study on the impact of international trade and foreign direct investment on carbon emission for belt and road countries

Abstract

The rapid development of trade along the Belt and Road Initiative (BRI) directly affect economic growth and influence carbon emission. This study used fifty-two BRI countries out of the sixty-five countries that signed onto the BRI in 2013 for the empirical study. The panel data extracted is from the period 1993 to 2018. The study utilized the Common Correlated Effects Mean Group (CCEMG) and the Augmented Mean Group (AMG) estimation techniques for the empirical analysis. The findings revealed a positive link between imports and carbon emissions. Contrarily, exports revealed an inverse relationship with carbon emission, while foreign direct investment inflow revealed a positive but insignificant relationship with consumption-based carbon emission. Therefore, it is recommended that to control the environment and maintain ecological balance, there is the need to establish environmental protection clauses in many international treaties and domestic legislation while promoting international trade.

Keywords

• International trade
• Carbon emission
• Belt and road countries
• Foreign direct investment