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The impact of FDI on CO2 emission in a small island developing state: A cointegration approach

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  • Sheereen Fauzel

Abstract

This paper examines the long run and short run impact of FDI (disaggregated into manufacturing and non- manufacturing sector), on CO2 emission in Mauritius. In this study the bounds testing approach to cointegration is used. For instance, the Autoregressive Distributed Lag (ARDL) model is used on time series data over the period 1980 to 2012. The main findings of this study show that foreign investment in the manufacturing sector is harmful for the environment whereas FDI in non-manufacturing sectors does not really affect the environment. Moreover, an increase in growth is as well seen to increase the level of CO2 emission. Energy use in the country also proved to result in an increase in CO2 emission. The findings further confirm the stability of the model for the small island economy of Mauritius.

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  • Sheereen Fauzel, 2017. "The impact of FDI on CO2 emission in a small island developing state: A cointegration approach," Economics and Business Letters, Oviedo University Press, vol. 6(1), pages 6-13.
    • Handle: RePEc:ove:journl:aid:11225
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    1. Mohd Shahidan Shaari & Nor Ermawati Hussain & Hussin Abdullah & Syahida Kamil, 2014. "Relationship among Foreign Direct Investment, Economic Growth and CO2 Emission: A Panel Data Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 4(4), pages 706-715.
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    2. Bhuvaneskumar Annamalaisamy & Sivakumar Vepur Jayaraman, 2023. "Renewable energy for sustainable development in Asia‐Pacific region: Do foreign direct investment and regulatory quality matter?," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(1), pages 108-124, February.
    3. Sujan Chandra Paul & Md. Harun Or Rosid & Md. Jamil Sharif & Anjuman Ara Rajonee, 2021. "Foreign Direct Investment and CO2, CH4, N2O, Greenhouse Gas Emissions: A Cross Country Study," International Journal of Economics and Financial Issues, Econjournals, vol. 11(4), pages 97-104.
    4. Zakari, Abdulrasheed & Li, Guo & Khan, Irfan & Jindal, Abhinav & Tawiah, Vincent & Alvarado, Rafael, 2022. "Are abundant energy resources and Chinese business a solution to environmental prosperity in Africa?," Energy Policy, Elsevier, vol. 163(C).
    5. Destek, Mehmet Akif & Sinha, Avik & Özsoy, Ferda Nakıpoglu & Zafar, Muhammad Wasif, 2023. "Capital Flow and Environmental Quality at Crossroads: Designing a Sustainable Policy Framework for the Newly Industrialized Countries," MPRA Paper 117560, University Library of Munich, Germany.

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