EFFECT OF FOREIGN DIRECT INVESTMENTS AND ADVANCEMENTS OF TECHNOLOGY ON CARBON DIOXIDE EMISSION IN SOUTH ASIAN COUNTRIES

Abstract

Foreign Direct Investments (FDI) and Technological Advancements (TA) are significant driving forces of economic growth. However, the consequences of the FDI and TA on the environment remain controversial due to the contradictory findings of the empirical studies. Therefore, this study examined the short-run and long-run impacts of FDI and TA on the Carbon Emissions (CO2) of South Asian countries. The sample consisted of six South Asian countries and data were collected for 19 years from 2000 to 2018. The three-panel ARDL models namely, Pooled Mean Group (PMG), Mean Group (MG), and Dynamic Fixed Effect (DFE) estimations were used as main panel data analysis tools. The findings indicated that the rapid advancement of technology and the rise in foreign direct investment (FDI) contribute to a rise in long term CO2. However, there is no noteworthy relationship between CO2 and FDI or TA)in the short term. The main findings of this research deliver key policy directions for South Asian nations to consider. The conclusions demonstrate and emphasize the significance of establishing policy frameworks and guidelines for the elimination or effective management of CO2emission. Additionally, this study suggests the need for greater investment in research and development of technological innovations aimed at reducing CO2. Furthermore, it highlights the importance of adopting a unified policy stance to achieve long-term sustainable development goals within the region.