Abstract
This study investigates the interrelationships between carbon emissions, foreign direct investment (FDI), economic growth, and gross value added (GVA) in agriculture, service, manufacturing, and resource-extensive industries, including the construction sector. We classified European regions into four-panel groups, Eastern Europe (EE), Southern Europe (SE), Northern Europe (NE), and Western Europe (WE). A 3SLS (three-stage least squares) simultaneous equation estimation was performed to cheque the causality between the four European panel groups using World Bank data from 2000 to 2018. This study further discusses the challenges technologically rich economies face in growing industrialisation when formulating policies to reduce CO2 emissions. The results show that the causality among the variables, carbon emissions, economic growth, FDI, and all four sectors of GVA varies according to the region. This study indicates that CO2 emissions have bidirectional causality with the GVA output in all four industrial sectors.
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Source: author; note: CO2, carbon emission; FDI, foreign direct investment; GDPPC, GDP per capita; GVA-M, GVA of the manufacturing sector; GVA-C, GVA for construction and mining; GVA-S, GVA of the service sector; GVA-A, GVA for agriculture
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Acknowledgements
The scholar Devesh Singh is the awardee of the ICSSR Post-Doctoral Fellowship. This paper is largely an outcome of the Post-Doctoral Fellowship sponsored by the Indian Council of Social Science Research (ICSSR), file number: 3-147/2021-2022/PDF/GEN. However, the responsibility for the facts stated, opinions expressed, and the conclusions drawn is entirely of the author.
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Devesh Singh—conceptualisation, formal analysis, investigation, writing original draught, methodology, visualisation, and data curation; Sunil Kumar Dhiman—supervision, review, and visualisation.
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Singh, D., Dhiman, S.K. The linkage between carbon emissions, foreign direct investment, economic growth, and gross value added. J Environ Stud Sci 13, 156–176 (2023). https://doi.org/10.1007/s13412-022-00809-2
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DOI: https://doi.org/10.1007/s13412-022-00809-2