The Effects Of FDI,Technological Innovation,and Financial Development On CO₂ Emissions:BRICs

There has been a large number of studies examining the impact of FDI-growth nexus.Unfortunately the studies missed the essential role played by technological innovation(TI)and financial development regarding the environmental costs.The existing literature clearly reveals that the impact of Technological Innovation on the environment has been neglected as such the current study highlighted the effect of the association.The current study drastically differs from a recent study,carried out by Danish and Wang(2019)on BRICS Countries,where their investigated the association of natural resources and CO2 emission.The present study will add to the existing literature in the domain of FDI,TI,financial development and carbon emissions in BRICS Countries.The study also highlighted the validity of EKC measuring the association of economic development and carbon emission.The present study is of huge importance because,according to the EPPC Fourth Assessment Report,the global atmospheric temperature must increase beyond 2?,henceforth the paper will justify the significance of FDI,TI and financial development in maintaining the environmental quality.Also the environmental experts have identified a number of affordable alternative energy technologies which can be used to keep the environment at such temperature(IPCC 2007,2014;Tol 2007).The present study endeavors to explore the compound effect of FDI,TI,and financial development on CO2 emissions in BRICS member states.Drawing on the data from 1990 to 2017,we employed the panel co-integration Fully Modified Ordinary Least Squares(FMOLS)and panel Dynamic Ordinary Least Squares(DOLS).Pearson Cross-sectional Dependence(CD)test,UPS,CIPS and CADF panel unit root tests have been used to test the correct identification of the order of integration.The study variables are completely integrated at the same order I(1).Kao and Westerlund panel co-integration test was applied due to the presence of CD in the panel data.The study findings reveal that the pollution halo hypothesis and the Environmental Kuznets curve(EKC)are commonly valid in the case of BRICS member states.Moreover,FDI,TI,and economic development in the BRICS states were found to possess a significant statistical long-run co-integrating association with environmental degradation.The study chose to employ the D-H panel causality test for examining the direction of causality.The research findings revealed a unidirectional causality between FDI,TI and CO2 emission.Furthermore,bidirectional causal relationship was found between GDP,financial development index and carbon emission.The most significant findings of the current study point towards more pro-environmental FDI,TI,and economic development.