Exploring the asymmetric impact of economic complexity, FDI, and green technology on carbon emissions: Policy stringency for clean-energy investing countries

Abstract

All economies are concerned about rising carbon emissions, which contribute to environmental degradation. The current paper formulates a novel framework to scrutinize the impacts of shocks in economic complexity, FDI, environmental technology, and renewable energy on carbon emission in the leading clean energy investment countries, spanning the period from 1995 to 2020. In spite of the constraint for better environmental defence and the realization of the Sustainable Development Goals (SDGs), this paper introduces an empirical approach utilizing the Panel NARDL methodology to investigate the asymmetrical connections between carbon emissions and relevant exogenous factors. Furthermore, we utilize additional techniques, namely AMG and CCEMG, to enhance the robustness of our findings. Our empirical findings reveal that positive shocks in economic complexity, FDI, environmental technology, and renewable energy reduce carbon emissions while negative shocks may result to elevated pollution levels in the long-run. However, adverse shocks in economic complexity and FDI cause increased pollution in the long run. Likewise, the short-run coefficient signs are also similar to the long-run coefficient signs but different in significance level and magnitude. This has paved the way for a well-designed policy for leading clean-energy investment countries should focus on structural change, FDI, technology and renewable energy consumption.