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

23 July 2018 | Muhammad Shahbaz, Muhammad Ali Nasir, David Roubaud
This paper examines the determinants of carbon emissions in France, focusing on foreign direct investment (FDI), financial development, economic growth, energy consumption, and energy research innovations. Using time series data from 1955 to 2016, the authors apply the SOR unit root test and the bootstrapping bounds testing approach to analyze the integration and cointegration properties of the variables. The findings indicate 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. The relationship between economic growth and CO₂ emissions follows an inverted-U pattern, supporting the Environmental Kuznets Curve (EKC) hypothesis. Energy consumption is positively linked with carbon emissions. The causality analysis reveals a feedback effect between FDI and carbon emissions, and between economic growth and carbon emissions. The study provides insights into the economic and environmental policies needed to achieve sustainable economic growth and emission targets in France.This paper examines the determinants of carbon emissions in France, focusing on foreign direct investment (FDI), financial development, economic growth, energy consumption, and energy research innovations. Using time series data from 1955 to 2016, the authors apply the SOR unit root test and the bootstrapping bounds testing approach to analyze the integration and cointegration properties of the variables. The findings indicate 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. The relationship between economic growth and CO₂ emissions follows an inverted-U pattern, supporting the Environmental Kuznets Curve (EKC) hypothesis. Energy consumption is positively linked with carbon emissions. The causality analysis reveals a feedback effect between FDI and carbon emissions, and between economic growth and carbon emissions. The study provides insights into the economic and environmental policies needed to achieve sustainable economic growth and emission targets in France.
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[slides and audio] Environmental degradation in France%3A The effects of FDI%2C financial development%2C and energy innovations