CO2 emissions, Energy Consumption and Economic Growth in ANICS Countries

Abstract

This study examines the causal relationship between CO2 emissions, energy consumption, output and FDI (foreign direct investment) in ANICs (Asian newly industrialized countries: Hong Kong, Republic of Korea, Singapore, Taiwan) from 1971 to 2011. The result based on VECM (Vector Error Correction Model) implied that there is a long run cointegrated relationship between CO2 emissions, energy consumption, output and FDI. The result supports the environmental Kuznets curve hypothesis in this region. Short run dynamics show the Granger Causality from economic growth to CO2 emissions. There is an also indirect causality from FDI (inward FDI and outward FDI) to CO2 emissions in the short run. In the long run, there was unidirectional granger causality from the other variables to CO emissions.