The impact of economic growth, population density, and FDI inflows on CO2 emissions in BRICTS countries: Does the Kuznets curve exist?

This study aims at examining the nonlinear influence of economic growth, foreign direct investment, and population density on the environmental degradation in the BRICTS countries from 1990 to 2014. All the variables were found to be stationary based on recent panel unit root tests. On fully applying both static (OLS, FE, and RE) and dynamic (system GMM) panel data approaches, it was found that there is a relationship between CO2-GDP that foregrounds the Kuznets curve for individual cases. In fact, the Kuznets curve is valid in the BRICTS countries. This validation is strengthened through the relationship between emissions and population density, as well as between CO2 emissions and FDI inflows. The overall results showed that the population density and FDI inflows initially increased, which reduced the CO2 emissions as the population and FDI inflows reached the threshold level, thus confirming the FDI halo hypothesis (FDI halo). In contrast, the Kuznets curve between CO2 emissions and economic growth is not valid. This implies that the increase of economic growth impedes the environmental quality. These empirical insights are of particular interest to policymakers as they help build sound economic and energy conservation policies to support the environment quality.