Abstract
World is struggling with the upcoming threats of CO2 emissions, that is why, in order to achieve global environmental sustainability in the greenhouse gas emissions, several countries in 1997 agreed on Kyoto protocol which imposes some obligations on developed nations in the reduction of greenhouse gas emissions. The growing trend of CO2 emissions is not only the case for developed nations, indeed, in the last decade emerging economies are capturing large scale of emissions and becoming much more hazardous for global warming.
Especially, in developing economies foreign direct investments are dominant in polluting industries. Economic growth and FDI from this perspective, are causing CO2 emissions to augment, if governments and industries are willingness in the alleviation of pollution.
Thus, in this paper we have studied the impacts of FDI and economic growth on the Environmental degradation, proxied by consumption based CO2 emissions for Azerbaijan country case. For this purpose, co-integration techniques were employed to the time series data over the period of 1996-2013.
Cointegration test concluded that there is a long-run co-movement among the variables. Estimation results show that FDI and economic growth have positive and statistically significant impact on CO2 emissions in the long-run.
The findings of the study can be used by policymakers in making adequate decisions in related environmental degradation-FDI-economic growth circumstances.