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Moderating and mediating role of renewable energy consumption, FDI inflows, and economic growth on carbon dioxide emissions: evidence from robust least square estimator

  • Saiqa Naz
  • Rashida Sultan
  • Khalid Zaman
  • Abdullah Mohammed Aldakhil
  • Abdelmohsen A. Nassani
  • Muhammad Moinuddin Qazi Abro
Research Article
  • 99 Downloads

Abstract

The relationship between renewable energy consumption (REC), foreign direct investment (FDI) inflows, economic growth, and their resulting impact on CO2 emissions is widely discussed area in energy and environmental literature; however, there is an unseen literature on moderation and mediation effect of per capita income and FDI inflows with the renewable energy consumption on CO2 emissions in developing countries like Pakistan, which is being evaluated in this study by using a consistent time series data for a period of 1975–2016. The results show that economic growth and FDI inflows both increase CO2 emissions, while REC substantially decreases CO2 emissions during the study time period. The results do not support the inverted U-shaped Environmental Kuznets Curve (EKC) hypothesis for per capita income (and FDI inflows) and per capita CO2 emissions in a country. The results supported ‘pollution haven hypothesis’ where FDI inflows damage the natural flora of the country. By inclusion of moderation and mediation effect of per capita income and FDI inflows with the REC on CO2 emissions averted the positive impact of REC, and converted into negative externality, where environmental sustainability agenda is compromised by lower environmental regulations and unsustainable production techniques that increase country’s economic growth. The study concludes that by adding REC in existing energy portfolio may help to reduce CO2 emissions while strict environmental compliance may disregard the negative externality of unsustainable production and it will support to achieve green development programmes in a country.

Keywords

Renewable energy consumption CO2 emissions FDI inflows Economic growth Sustainable development 

Notes

Acknowledgments

The authors would like to extend their sincere appreciation to the Deanship of Scientific Research at King Saud University for funding this research group no. (RG-1436-037).

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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  • Saiqa Naz
    • 1
  • Rashida Sultan
    • 1
  • Khalid Zaman
    • 1
  • Abdullah Mohammed Aldakhil
    • 2
  • Abdelmohsen A. Nassani
    • 2
  • Muhammad Moinuddin Qazi Abro
    • 2
  1. 1.Department of EconomicsUniversity of WahWah CanttPakistan
  2. 2.Department of Management, College of Business AdministrationKing Saud UniversityRiyadhSaudi Arabia

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