Climate Change and Environment Kuznets Curve in Developing Economies (D-8 Nations)

Abstract

The main goal of the current study is to determine the relationships between CO2 emissions and the inflow of foreign investment for developing economies (D-8 countries) to determine whether or not the environmental Kuznets curve hypothesis is validated or otherwise for the study areas. The dependent variable in the current study is carbon dioxide emissions. The population was used as the control variable in this study, while the independent variables were population growth, per capita Gross Domestic Product (GDP), inflow of foreign investment, inflation, and open trade for D-8 countries from 1999 to 2023. The Fixed Effect (FE) and Random Effect (RE) model techniques were used for empirical analysis, and the Hausman test was used to choose the best-fitting model for this study. Empirical findings validate the existence of the Environmental Kuznets curve (EKC) hypothesis in D-8 countries over the study period. Additionally, there is a strong positive correlation between the inflow of foreign investment and carbon emissions, supporting the pollution heaven hypothesis, which holds that developed countries transfer their obsolete technology to developing nations. This paper explains how Foreign Direct Investment (FDI) and GDP per capita impact carbon dioxide emissions in developing countries and assists policymakers in proposing policies to draw in higherquality FDI. Developing countries need to take a comprehensive and varied approach to achieve green economic growth. By utilizing renewable energy and promoting environmentally friendly transportation it is currently crucial to turn the transportation sector green and promote environmentally friendly transportation to lessen environmental effects and make the environment more environmentally friendly. This may be done by using renewable energy and encouraging environmentally friendly transportation. The need to coordinate global policies with the Sustainable Development Goals (SDG) is the main subject of this study, especially when it comes to achieving sustainable economic growth with the fewest possible environmental risks. Government and policymakers may achieve a sustainable future for developing nations by balancing economic development and environmental sustainability by focusing on green economic growth.