The Impact Of FDI On CO₂ Emissions In The ECOWAS Region

Based on the annual panel data of the Economic Community of West African States（ECOWAS）region from 1975 to 2014,this paper uses ARDL method to study the impact of foreign direct investment（FDI）inflows on carbon dioxide（CO₂）emissions in the region.Granger causality test is used to analyze the causality between FDI and CO₂ emissions in the region.This paper first reviews the relevant theories of FDI and CO₂ emissions,and then analyzes the current situation of FDI and CO₂ emissions in this region,including the source,scale and sector distribution of FDI,as well as the change of CO₂ emissions trend in this region.Then,the ARDL model of panel data is constructed to analyze the impact of FDI on CO₂ emissions.The results show that FDI inflow has a significant positive impact on the CO₂ emissions of ECOWAS region in both short-term and long-term.This means that FDI inflow will increase CO₂ emissions and aggravate environmental pollution.FDI is the Granger cause of CO₂emission,while CO2 emission is the Granger cause of FDI.There is also a two-way causal relationship between FDI lag period and CO₂ emissions.FDI lag period is the Granger cause of CO₂ emissions,and CO₂ emissions is the Granger cause of FDI lag period.This shows that there is a close relationship between FDI inflows and CO₂ emissions.As far as industries are concerned,FDI inflow has different effects on CO₂ emissions of different industries.In the short run,FDI has no significant impact on CO₂ emissions of manufacturing and service sectors,but has a significant positive impact on CO₂ emissions of heating sector.In the long run,FDI has no significant impact on CO₂ emissions of manufacturing sector,negative impact on CO₂ emissions of service sector,and no significant impact on CO₂ emissions of heating sector.In addition,in the short run,FDI has a significant negative impact on CO₂ emissions per capita and CO₂ emission intensity.In the long run,FDI has a significant positive impact on CO₂ emissions per capita and CO₂ emission intensity,but FDI lags behind for one period and has a significant negative impact on CO₂ emission intensity.The results of most empirical models show that the economic development of ECOWAS region is basically in line with the Environmental Kuznets Curve（EKC）hypothesis.Based on the above research results,this paper suggests that:the ECOWAS region should take relevant measures to attract high-quality FDI,promote domestic industrial upgrading by introducing advanced and efficient production technology,improve production efficiency and reduce CO₂ emissions.At the same time,different policies should be formulated for different industries.In addition,the ECOWAS region should enhance their ability to learn and absorb advanced FDI,and strive to reduce CO₂ emissions and environmental pollution.