The Effect Of Economic Factors On Co2 Emissions: The Case Of Developing Countries

Abstract

In light of the increasing economic progress and globalization, the increase in CO2 emissions has become a worrying issue, directly affecting climate change and the living environment. Concerns regarding CO2 emissions are beginning to rank highly not only in developed economies but also in developing nations. However, there are few studies looking at how economic factors affect CO2 emissions in developing countries, and few papers considering the period until 2022. Therefore, this study focuses on the link between economic indices and carbon dioxide emissions in 110 developing countries between 2007 and 2022. Using the panel data regression model, the interesting findings of this research show that economic growth, financial development, and international trade have significant positive correlation on carbon dioxide emissions. These variables also strongly support Environment Kuznets Curve theory and Pollution-Haven Hypothesis. Notably, FDI has a statistically insignificant negative effect in the group of countries studied and support the Pollution-Halo Hypothesis. From there, policies are suggested to draw more capital to the development of renewable energy sources; offer investors with details information about the connection between environmental preservation and economic expansion; and implement environmental protection strategies to lower emissions in the developing market in the direction of sustainable growth.