Environmental Degradation in France: The Effects of FDI, Financial Development, and Energy Innovations

Environmental Degradation in France: The Effects of FDI, Financial Development, and Energy Innovations

2018 | Shahbaz, M and Nasir, M and Roubaud, D
This paper investigates the determinants of carbon emissions in France, focusing on the roles of foreign direct investment (FDI), financial development, and energy research innovations. Using a novel SOR unit root test and bootstrapping bounds testing approach, the study examines the integration and cointegration of variables over 1955-2016. Results show that FDI has a positive impact on carbon emissions, while energy research innovations have a negative impact. Financial development reduces carbon emissions, improving environmental quality. Energy consumption is positively linked to carbon emissions, and the relationship between economic growth and carbon emissions follows an inverted-U shape, validating the environmental Kuznets curve (EKC). The study also finds a feedback effect between FDI and carbon emissions, with economic growth positively affecting emissions and emissions negatively affecting growth. Financial development and energy research innovations have bidirectional negative effects on carbon emissions. The findings highlight the importance of financial stability and energy innovations in improving environmental quality in France. The study contributes to the literature by examining the EKC in the French context, considering financial development and energy research expenditures, applying the SOR unit root test with structural breaks, and using the bootstrapping ARDL bounds test for cointegration analysis. The results have implications for economic and environmental policy in France.This paper investigates the determinants of carbon emissions in France, focusing on the roles of foreign direct investment (FDI), financial development, and energy research innovations. Using a novel SOR unit root test and bootstrapping bounds testing approach, the study examines the integration and cointegration of variables over 1955-2016. Results show that FDI has a positive impact on carbon emissions, while energy research innovations have a negative impact. Financial development reduces carbon emissions, improving environmental quality. Energy consumption is positively linked to carbon emissions, and the relationship between economic growth and carbon emissions follows an inverted-U shape, validating the environmental Kuznets curve (EKC). The study also finds a feedback effect between FDI and carbon emissions, with economic growth positively affecting emissions and emissions negatively affecting growth. Financial development and energy research innovations have bidirectional negative effects on carbon emissions. The findings highlight the importance of financial stability and energy innovations in improving environmental quality in France. The study contributes to the literature by examining the EKC in the French context, considering financial development and energy research expenditures, applying the SOR unit root test with structural breaks, and using the bootstrapping ARDL bounds test for cointegration analysis. The results have implications for economic and environmental policy in France.
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