Navigating Carbon Peaking and Neutrality in MENA: The Impact of Foreign Direct Investment and Trade Openness Using Panel PCSE and FGLS Techniques

ABSTRACT In response to the global challenge of climate change and the drive towards carbon neutrality, this study investigates the effects of foreign direct investment (FDI) and trade openness (TO) on carbon emissions (CEM) within the Middle East and North Africa (MENA) region. The research spans 1...

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Bibliographic Details
Published in:Environmental quality management 2024-12, Vol.34 (2), p.n/a
Main Authors: Saeed, Ummar Faruk, Twum, Angelina Kissiwaa, Klugah, Godfred Etse
Format: Article
Language:English
Subjects:
Carbon
carbon emissions
Carbon neutrality
Causality
Climate change
Emissions
Energy consumption
Environmental impact
Environmental Kuznets curve
FDI
Foreign investment
Least squares
MENA
Sustainable development
trade openness
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Summary:ABSTRACT In response to the global challenge of climate change and the drive towards carbon neutrality, this study investigates the effects of foreign direct investment (FDI) and trade openness (TO) on carbon emissions (CEM) within the Middle East and North Africa (MENA) region. The research spans 18 countries from 1990 to 2022, focusing on Sustainable Development Goal 13. Utilizing Porter's hypothesis and the Environmental Kuznets Curve (EKC) theory, the study applies quantitative methods including panel corrected standard errors (PCSE) and feasible generalized least squares (FGLS) to ensure robustness. To address potential endogeneity, two‐stage least squares and lagged effect estimations are employed. The findings reveal that both FDI and TO are associated with reduced CEM, indicating positive environmental impacts. Also, the pairwise causality tests show bidirectional causality between FDI, TO, and CEM, while a unidirectional causality is found from industrialization (IND) and energy consumption (EC) to CEM. These results underscore the importance of integrating FDI and TO into strategies for achieving carbon neutrality and advancing sustainable development goals, offering actionable insights for policymakers.
ISSN:1088-1913
1520-6483
DOI:10.1002/tqem.22352