The asymmetric impact of foreign direct investment and financial development on carbon dioxide emissions in Egypt

Document Type : Original Article

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Department of Economics and Public Finance - Faculty of Commerce - Kafr El-Sheikh University

Abstract

This study aims to examine the asymmetric effects of foreign direct investment and financial development on carbon emission in Egypt. Using the nonlinear autoregressive distributed lag (NARDL) model. relying on annual data during the period (1980 - 2022), The findings from the estimations in the long run show that a positive impact of both foreign direct investment and financial development on carbon emission, While there is a negative impact of energy prices on carbon dioxide emissions, The asymmetric results in the long run show that positive changes in foreign direct investment lead to increased carbon emissions, while negative changes in foreign direct investment lead to decreased carbon emissions, which confirms the validity of the pollution haven hypothesis in the Egyptian economy. While positive changes in financial development, lead to lower carbon emissions, while negative changes in financial development increase carbon emissions.

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