Role of foreign direct investment interaction to energy consumption and institutional governance in sustainable GHG emission reduction

The theme of the environmental upgrades and Sustainable Development Goals (SDGs) of the United Nations is Better Environment, Better tomorrow. This study uses regulatory quality (RgQ) and energy consumption per capita (EC) as explanatory variables and foreign direct investment (FDI) as an integrating variable with RgQ and EC and examines their impacts on greenhouse gas (GHG) emissions from 2001 to 2018 in panel Asian economies. The findings indicate that EC negatively impacts GHG emissions, while RgQ positively promotes the reduction of GHG emissions in Asia. In addition, FDI has an integrating role, as sufficient FDI inflows significantly enhance clean energy use and EC efficiency. Such inflows also support and improve Asia's regulation quality by upgrading standardization investments and technology deployment to enhance institutional quality and achieve SDGs. FDI inflows have thus been vital in environment upgrading in Asia and regional sustainable environmental development.

Automated summary

This study finds that per capita energy consumption in Asian economies has a negative impact on greenhouse gas emissions, while regulatory quality has a positive effect on reducing emissions. Foreign direct investment plays an integrating role in promoting clean energy use and enhancing regulatory quality in Asia for sustainable environmental development.