Macroeconomic Determinants of CO2 Emissions: Evidence from A Generalized Least Squares (GLS) Analysis

Wissem R

Published on: 2026-05-02

Abstract

This study explores the impact of foreign direct investment (FDI), economic growth, renewable energy electricity production, population density, and inflation on carbon dioxide (CO₂) emissions in eight emerging countries over the period 1970-2024. Using the Generalized Least Squares (GLS) method, the empirical results reveal that economic growth is positively associated with carbon emissions, which verifies the environmental Kuznets curve theory. Foreign direct investment (FDI) also has a positive and statistically significant effect on CO₂ emissions, justifying its role in environmental degradation and validating the "pollution refuge" hypothesis. On the other hand, renewable electricity production and population have a significant negative impact on carbon dioxide emissions. In contrast, inflation has no robustly detected effect on CO₂ emissions. In order to support the energy transition and the accomplishment of sustainable development goals, these findings encourage government to think about policies that are specific to their own circumstances.