The nexus between CO₂ emissions, renewable energy consumption, foreign direct investment, and economic growth: evidence across different income groups of countries

Abstract This article aims to investigate the existance of a possible dynamic link among economic growth, renewable energy consumption, environmental emissions, and CO 2 across various countries from 2000 to 2019. By categorizing countries based on income levels, the research analyzes the interactions among variables such as CO 2 emissions, foreign direct investments (FDI), labor force, industrial value-added, and gross capital formation. Employing a quantitative approach, several statistical methods were applied, including panel unit root examination, Pedroni cointegration analysis, VECM models (Vector Error Correction Model), and panel causality testing. Evidence of cointegration among the variables was found. The causality test showed causal relationships between the variables. The results obtained during this reserach could define preliminary premises for policymakers and stakeholders, as they underscore relevant and high determinant relationships between energy consumption, environmental factors, and economic development.The study underscores that while renewable energy is vital for sustainable development, its impact on economic growth being is influenced by various factors and policies.