The relationship between economic growth, population, FDI, globalization, and CO2 emissions in OIC member countries

Abstract

The concentration of CO2 emissions in OIC member countries has decreased over the past decade. The theory of sustainable growth suggests that increased CO2 emissions can be influenced by various factors such as economic growth, population, FDI, and globalization, and vice versa. However, economic growth, population, FDI, and globalization in OIC member countries have all increased, which contradicts the theory of sustainable growth. Therefore, this study aims to test and analyze the effects of economic growth, population, FDI, and globalization on CO2 emission concentrations in OIC member countries. This research is quantitative, using data on economic growth, population, FDI, globalization index, economic globalization, political globalization, and social globalization for 53 OIC member countries over the period from 1992 to 2020, obtained from various sources such as the World Bank, UNCTAD, and the KOF Index of Globalization. The data analysis technique used is the System GMM. The results of this study show that economic growth and increased FDI have a significant effect on increasing CO2 emission concentrations. In contrast, increases in population and globalization have a reducing effect on CO2 emission concentrations in OIC member countries.

Keywords

• CO2 emission
• OIC countries
• Sustainable growth
• System GMM

References

1. T. Strange, and A. Bayley, “Sustainable development: linking economy, society, environment,” OECD Publications, 2008. [CrossRef]
2. M. K. Scanlan, “Prosperity in the Fossil-Free Economy: Cooperatives and the Design of Sustainable Businesses,” 1st ed. Yale University Press, 2021. [CrossRef]
3. J. Mao, C. Li, Y. Pei, and L. Xu, “Circular economy and sustainable development enterprises,” 1st ed. Springer, 2020.
4. F. Hoster, H. Welsch, and C. Böhringer, “CO2 abatement and economic structural change in the european internal market,” 1st ed. Physica Heidelberg, 1997. [CrossRef]
5. D. H. Meadows, D. L. Meadows, J. Randers, and W. W. Behrens, “The Limits to growth,” Universe Books, 1972.
6. M. K. Khan, M. I. Khan, and M. Rehan, “The relationship between energy consumption, economic growth and carbon dioxide emissions in Pakistan,” Financial Innovation, Vol. 6, Article 1, 2020. [CrossRef]
7. T. S. Adebayo, and G. D. Akinsola, “Investigating the causal linkage among economic growth, energy consumption and CO2 emissions in Thailand: An application of the wavelet coherence approach Tomiwa”, International Journal of Renewable Energy Development, Vol. 10(1), pp. 17–26, 2020. [CrossRef]
8. B. Aydoğan, and G. Vardar, “Evaluating the role of renewable energy, economic growth and agriculture on CO2 emission in E7 countries,” International Journal of Sustainable Energy, Vol. 39(4), pp. 335–348, 2020. [CrossRef]

9. A. Anwar, M. Younis, and I. Ullah, “Impact of urbanization and economic growth on CO2 emission: A case of far East Asian CountriesInternational Journal of Environmental Research and Public Health, Vol. 17(7), Article 2531, 2020. [CrossRef]
10. A. Mujtaba, and P. K. Jena, “Analyzing asymmetric impact of economic growth, energy use, FDI inflows, and oil prices on CO2 emissions through NARDL approach,” Environmental Science and Pollution Research, Vol. 28(24), pp. 30873–30886, 2021. [CrossRef]
11. SESRIC, “OIC Economic Outlook 2023: The Rise of the Digital Economy and Bridging the Digital Divide,” Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC), 2023.
12. J. K. McKee, “Sparing nature: The conflict between human population growth and Earth’s biodiversity,” Rutgers University Press, 2003.
13. Islamic Center for Development of Trade, “2022 Annual OIC Halal Economy Report,” Casablanca, 2022.
14. SESRIC, “OIC Economic Outlook 2022: Achieving Sustainable and Resilient Recovery Post Covid-19 Pandemic,” Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC), 2022.
15. A. K. de S. Mendonça, G. de Andrade Conradi Barni, M. F. Moro, A. C. Bornia, E. Kupek, and L. Fernandes, “Hierarchical Modeling of the 50 Largest Economies to Verify the Impact Of GDP, Population and Renewable Energy Generation in CO 2 Emissions,” Sustainable Production and Consumption, Vol. 22, pp. 58–67, 2020. [CrossRef]
16. X. Yang, N. Li, H. Mu, J. Pang, H. Zhao, and M. Ahmad, “Study on the long-term impact of economic globalization and population aging on CO2 emissions in OECD countries,” Science of the Total Environment, Vol. 787, Article 147625, 2021. [CrossRef]
17. J. Sengupta, “Understanding economic growth: Modern theory and experience,” 1st ed., Vol. 69(1), Springer New York, 2011. [CrossRef]
18. J. Yi, Y. Hou, and Z. Z. Zhang, “The impact of foreign direct investment (FDI) on China’s manufacturing carbon emissions,” Innovation and Green Development, Vol. 2(4), Article 100086, 2023. [CrossRef]
19. O. K. Essandoh, M. Islam, and M. Kakinaka, “Linking international trade and foreign direct investment to CO2 emissions: Any differences between developed and developing countries?” Science of the Total Environment, Vol. 712, Article 136437, 2020. [CrossRef]
20. N. Apergis, M. Pinar, and E. Unlu, “How do foreign direct investment flows affect carbon emissions in BRICS countries? Revisiting the pollution haven hypothesis using bilateral FDI flows from OECD to BRICS countries,” Environmental Science and Pollution Research, Vol. 30, pp. 14680–14692, 2023. [CrossRef]
21. S. Ali, Z. Yusop, S. R. Kaliappan, and L. Chin, “Dynamic common correlated effects of trade openness, FDI, and institutional performance on environmental quality: Evidence from OIC countries,” Environmental Science and Pollution Research, Vol. 27, pp. 11671–11682, 2020. [CrossRef]
22. S. M. Khan, S. Rehman, and S. Fiaz, “Impact of foreign direct investment (FDI), institutional performance and scientific innovations on environmental degradation: Evidence from OIC countries,” Research Journal for Societal Issues, Vol. 5(1), pp. 194–210, 2023. [CrossRef]
23. M. Umar, X. Ji, D. Kirikkaleli, M. Shahbaz, and X. Zhou, “Environmental cost of natural resources utilization and economic growth: Can China shift some burden through globalization for sustainable development?” Sustainable Devolepment, Vol. 28(6), pp. 1678–1688, 2020. [CrossRef]
24. A. Bilal, X. Li, N. Zhu, R. Sharma, and A. Jahanger, “Green Technology Innovation, Globalization, and CO2 Emissions: Recent Insights from the OBOR Economies,” Sustainability, Vol. 14(1), Article 236, 2022. [CrossRef]
25. W. Xiaoman, A. Majeed, D. G. Vasbieva, C. E. W. Yameogo, and N. Hussain, “Natural resources abundance, economic globalization, and carbon emissions: Advancing sustainable development agenda,” Sustainable Development, Vol. 29(5), pp. 1037–1048, 2021. [CrossRef]
26. K. E. Elfaki, and E. M. Ahmed, “Digital technology adoption and globalization innovation implications on Asian Pacific green sustainable economic growth,” Journal of Open Innovation: Technology, Market, and Complexity, Vol. 10, Article 100221, 2024. [CrossRef]
27. R. Santiago, J. A. Fuinhas, and A. C. Marques, “The impact of globalization and economic freedom on economic growth: The case of the Latin America and Caribbean countries,” Economic Change and Restructuring, Vol. 53, pp. 61–85, 2020. [CrossRef]
28. F. Farooq, Z. Yusop, I. S. Chaudhry, and R. Iram, “Assessing the impacts of globalization and gender parity on economic growth: empirical evidence from OIC countries,” Environmental Science and Pollution Research, Vol. 27, pp. 6904–6917, 2020. [CrossRef]
29. K. Dadkhah, “The evolution of macroeconomic theory and policy,” 1st ed. Springer Berlin, 2009. [CrossRef]
30. SESRIC, “OIC Environment Report 2023 Resilient Recovery for a Sustainable Environment,” Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC), 2023.
31. F. F. Adedoyin, M. I. Gumede, F. V. Bekun, M. U. Etokakpan, and D. Balsalobre-lorente, “Modelling coal rent, economic growth and CO2 emissions: Does regulatory quality matter in BRICS economies?,” Science of the Total Environment, Vol. 710, Article 136284, 2020. [CrossRef]
32. O. A. Osobajo, A. Otitoju, M. A. Otitoju, and A. Oke, “The impact of energy consumption and economic growth on carbon dioxide emissions,” Sustainability, Vol. 12(19), Article 7965, 2020. [CrossRef]
33. B. Li, and N. Haneklaus, “The role of renewable energy, fossil fuel consumption, urbanization and economic growth on CO2 emissions in China,” Energy Reports, Vol. 7, pp. 783–791, 2021. [CrossRef]
34. T. Zhang, J. Yin, Z. Li, Y. Jin, A. Ali, and B. Jiang, “A Dynamic Relationship Between Renewable Energy Consumption, Non-Renewable Energy Consumption, Economic Growth and CO2 Emissions: Evidence from Asian Emerging Economies,” Frontiers of Environmental Science, Vol. 10, pp. 01-16, 2023. [CrossRef]
35. J. P. Namahoro, Q. Wu, N. Zhou, and S. Xue, “Impact of energy intensity, renewable energy, and economic growth on CO2 Emissions: evidence from Africa across regions and income Levels,” Renewable and Sustainable Energy Reviews, Vol. 147, Article 111233, 2021. [CrossRef]
36. H. A. D. Hdom, and J. A. Fuinhas, “Energy production and trade openness: Assessing economic growth, CO2 emissions and the applicability of the cointegration analysis,” Energy Strategy Reviews, Vol. 30, Article 100488, 2020. [CrossRef]
37. M. M. Rahman, R. Nepal, and K. Alam, “Impacts of human capital, exports, economic growth and energy consumption on CO2 Emissions of a cross-sectionally dependent Panel: Evidence from the newly industrialized countries (NICs),” Environmental Science & Policy, Vol. 121, pp. 24–36, 2021. [CrossRef]
38. D. Gluns, “From plans to policies: Local housing governance for the growing cities Vienna and Washington, D.C.,” 1st ed., Springer, 2019. [CrossRef]
39. B. C. Field, and M. K. Field, “Environmental economics: An introduction” 7th ed., McGraw-Hill, 2017.
40. I. Khan, F. Hou, and H. P. Le, “The impact of natural resources, energy consumption, and population growth on environmental quality: Fresh evidence from the United States of America,” Science of the Total Environment, Vol. 754, Article 142222, 2021. [CrossRef]
41. Q. Wang, and L. Li, “The Effects of population aging, life expectancy, unemployment rate, population density, per capita GDP, urbanization on per capita carbon emissions,” Sustainable Consumption and Production, Vol. 28, pp. 760–774, 2021. [CrossRef]
42. R. Yu, Z. Wang, Y. Li, Z. Wen, and W. Wang, “Does population aging affect carbon emission intensity by regulating labor allocation?,” Sustainability, Vol. 15(12), Article 9721, 2023. [CrossRef]
43. M. M. Rahman, and K. Alam, “Clean energy, population density, urbanization and environmental pollution nexus: Evidence from Bangladesh,” Renewable Energy, Vol. 172, pp. 1063–1072, 2021. [CrossRef]
44. E. Rehman, and S. Rehman, “Modeling the nexus between carbon emissions, urbanization, population growth, energy consumption, and economic development in Asia: Evidence from grey relational analysis,” Energy Reports, Vol. 8, pp. 5430–5442, 2022. [CrossRef]
45. M. K. Anser, M. Alharthi, B. Aziz, and S. Wasim, “Impact of urbanization, economic growth, and population size on residential carbon emissions in the SAARC countries,” Clean Technologies and Environmental Policy, Vol. 22, pp. 923–936, 2020. [CrossRef]
46. L. Chandra Voumik, M. Ridwan, M. Hasanur Rahman, and A. Raihan, “An investigation into the primary causes of carbon dioxide releases in Kenya: Does renewable energy matter to reduce carbon emission?,’ Renew. Energy Focus, Vol. 47, Article 100491, 2023. [CrossRef]
47. A. Rehman, H. Ma, M. Ahmad, M. Irfan, O. Traore, and A. A. Chandio, “Towards environmental sustainability: Devolving the influence of carbon dioxide emission to population growth, climate change, forestry, livestock and crops production in Pakistan,” Ecological Indicators, Vol. 125(107460), pp. 1–11, 2021. [CrossRef]
48. K. Veidenheimer, “Carbon dioxide emission in maritime container transport and comparison of European deepwater ports: CO2 calculation approach, analysis and CO2,”Anchor Academic Publishing, 2014.
49. Y. Wang, M. Liao, L. Xu, and A. Malik, “The impact of foreign direct investment on China’s carbon emissions through energy intensity and emissions trading system,” Energy Economics, Vol. 97, Article 105212, 2021. [CrossRef]
50. A. C. Marques, and R. Caetano, “The impact of foreign direct investment on emission reduction targets: Evidence from high- and middle-income countries,” Structural Change and Economic Dynamics, Vol. 55, pp. 107–118, 2020. [CrossRef]
51. S. Ullah, M. Nadeem, K. Ali, and Q. Abbas, “Fossil fuel, industrial growth and inward FDI impact on CO2 emissions in Vietnam: Testing the EKC hypothesis,” Manag. Environ. Qual. An Int. J., vol. 33, no. 2, pp. 222–240, 2022. [CrossRef]
52. Y. Huang, F. Chen, H. Wei, J. Xiang, Z. Xu, and R. Akram, “The impacts of FDI inflows on carbon emissions: Economic development and regulatory quality as moderators,” Frontiers in Energy, Vol. 9, Article 820596, 2022. [CrossRef]
53. S. Asongu and N. M. Odhiambo, “Trade and FDI thresholds of CO2 emissions for a green economy in Sub-Saharan Africa,” International Journal of Energy Sector Management[CrossRef], Vol. 15(1), pp. 227–245, 2021. [CrossRef]
54. M. Z. Rafique, Y. Li, A. R. Larik, and M. P. Monaheng, “The Effects of FDI, Technological Innovation, And Financial Development on CO2 Emissions: Evidence from the BRICS Countries,” Environmental Science and Pollution Research, Vol. 27, pp. 23899–23913, 2020. [CrossRef]
55. Z. Wang, L. Gao, Z. Wei, A. Majeed, and I. Alam, “How FDI and Technology innovation mitigate CO2 emissions in high-tech industries: evidence from province-level data of China,” Environmental Science and Pollution Research, Vol. 29, pp. 4641–4653, 2022. [CrossRef]
56. H. Lin, X. Wang, G. Bao, and H. Xiao, “Heterogeneous spatial effects of FDI on CO2 emissions in China,” Earth’s Future, Vol. 10, Article e2021EF002331, 2022. [CrossRef]
57. M. Khan, A. T. Rana, and W. Ghardallou, “FDI and CO2 emissions in developing countries: The role of human capital,” Natural Hazards, Vol. 117, pp. 1125–1155, 2023. [CrossRef]
58. S. Y. Nof, “Springer handbook of automation, 2nd ed. Springer, 2023. [CrossRef]
59. M. Shahbaz, D. B. Lorente, and R. Sharma, “Economic growth and environmental quality in a post-pandemic World: New directions in the econometrics of the environmental kuznets curve. Routledge, 2023. [CrossRef]
60. A. Jahanger, M. Usman, and P. Ahmad, “Investigating the Effects of Natural Resources and Institutional Quality on CO2 Emissions During Globalization Mode in Developing Countries,” International Journal of Science, Environment and Technology, Vol. 20(9), pp. 9663–9682, 2023. [CrossRef]
61. T. Ma, and Y. Wang, “Globalization and Environment: Effects of International Trade on Emission Intensity Reduction of Pollutants Causing Global and Local Concerns,” Journal of Environmental Management, Vol. 297, Article 113249, 2021. [CrossRef]
62. R. S. M. Tsimisaraka, L. Xiang, A. Ralison, N. A. Andrianarivo, E. Z. Josoa, N. Khan, M. S. Hanif, A. Khurshid, and R. Limongi, “Impact of financial inclusion, globalization, renewable energy, ICT, and economic growth on CO2 emission in OBOR countries,” Sustainability, Vol. 15(8), pp. 1–16, 2023. [CrossRef]
63. B. Muhammad, and M. K. Khan, “Foreign direct investment inflow, economic growth, energy consumption, globalization, and carbon dioxide emission around the World,” Environmental Science and Pollution Research, Vol. 28, pp. 55643–55654, 2021. [CrossRef]
64. M. K. Anser, M. Usman, D. I. Godil, M. S. Shabbir, A. Sharif, M. I. Tabash, and L. B. Lopez, “Does globalization affect the green economy and environment? The relationship between energy consumption, carbon dioxide emissions, and economic growth,” Environmental Science and Pollution Research, Vol. 28, pp. 51105–51118, 2021. [CrossRef]
65. U. Mehmood, and S. Tariq, “Globalization and CO2 emissions nexus: Evidence from the EKC hypothesis in South Asian countries,” Environmental Science and Pollution Research, Vol. 27, pp. 37044–37056, 2020. [CrossRef]
66. J. W. Creswell, “Research design: Qualitative, quantitative, and mixed methods Approaches,” 4th ed., Sage Publication, 2014.
67. U. Mehmood, S. Tariq, Z. Ul Haq, M. U. Aslam, and A. Imran, “How economic growth contributes to CO2 emissions in the presence of globalization and eco-innovations in South Asian countries?,” World, Vol. 4(1), pp. 202–213, 2023. [CrossRef]
68. T. Sultana, M. S. Hossain, L. C. Voumik, and A. Raihan, “Does globalization escalate the carbon emissions? Empirical evidence from selected next-11 Countries,” Energy Reports, Vol. 10, pp. 86–98, 2023. [CrossRef]
69. M. Arellano, and S. Bond, “Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations,” Review of Economic Studies, Vol. 58(2), pp. 277–297, 1991. [CrossRef]
70. M. Arellano, and O. Bover, “Another look at the instrumental variable estimation of error-components models,” Journal of Econometrics, Vol. 68(1), pp. 29–51, 1995. [CrossRef]
71. R. Blundell, and S. Bond, “Initial conditions and moment restrictions in dynamic panel data models,” Journal of Econometrics, Vol. 87, pp. 115–143, 1998. [CrossRef]
72. A. K. Singh, and M. Tripathy, “Control Applications in Modern Power System: Select Proceedings of EPREC 2020,” Springer, 2020. [CrossRef]
73. J. D. Sargan, “The estimation of economic relationships using instrumental variables,” Econometrica, Vol. 26(3), pp. 393–415, 1958. [CrossRef]
74. H. Dinçer, and S. Yüksel, “Clean energy investments for zero emission projects: An analysis on how to reduce the carbon footprint,” 1st ed., Springer Cham, 2022. [CrossRef]
75. D. A. Ahlburg, A. C. Kelley, and K. O. Mason, “The impact of population growth on well-being in developing countries,” 1st ed., Springer Berlin Heidelberg, 1996. [CrossRef]
76. C. Mitchell, “The political economy of sustainable energy,” 1st ed.,Palgrave Macmillan, 2008.
77. SESRIC, “OIC Economic Outlook 2020: Trade and Integration Challenges amid Rising Uncertainties,” Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC), 2020.
78. A. N. Ali, “Globalisation, its impact on the economies of OIC countries and the role of the private sector,” Journal of Economic Cooperation Among Islamic Countries, Vol. 19(1–2), pp. 153–169, 1998.
79. P. Ekins, and T. Voituriez, “Trade, globalization and sustainability impact assessment: A Critical Look at Methods and Outcomes,” Earthscan, 2009.