Advancing carbon neutrality in post-COP28 in Ghana: Examining the impact of foreign direct investment and governance indicators

Abstract

This paper investigates the efficacy of foreign direct investment (FDI) and governance quality in reducing the adverse impact of CO2 emissions in Ghana. To achieve this aim, panel data for the independent and control variables spanning from 2000 to 2022 were obtained from World Development Indicators database and World Governance Indicators. The data was analysed using the Fixed Generalised Least Squares (FGLS) and the Method of Moment Quantile Regression (MMQR) methods. The findings of the study reveal that FDI aids in lowering the level of CO2 emissions in Ghana and therefore can be achieved through political stability, voice and accountability, controlled corruption, and enforcement of rule of law. It further reveals that the level of governance effectiveness and regulation quality is low in attracting FDI to aid in lowering CO2 emissions in Ghana. This study suggests that policymakers in Ghana should strengthen the system and structure governing the environmental management process and improve the quality of environmental policies to encourage environmentally friendly FDI flows.

Keywords

• CO2 emissions
• Foreign investment
• Governance quality
• FGLS
• MMQR
• Ghana