Evaluating the Impact of Inward FDI & Economic Growth Upon the Carbon Emissions of South Korea

This study aims to evaluate the impact of inward foreign direct investment (FDI) and economic growth on carbon emissions in South Korea, a nation committed to achieving carbon neutrality by 2050. Given the dual role of inward FDI and economic growth in fostering economic development and potentially increasing carbon emissions, this study explored the complex relationships among these variables. This study uses annual time-series data from 1990 to 2021, including carbon emissions (CO₂) as the dependent variable and GDP, inward FDI, and renewable energy consumption as explanatory variables. An autoregressive distributed lag (ARDL) bounds test was employed to assess the long-term relationships between these variables. The empirical analysis confirms the long-run relationship among FDI, economic growth, renewable energy use, and carbon emissions in South Korea. This finding underscores the necessity of integrating sustainable investment practices and renewable energy solutions to mitigate the environmental impact of economic growth and FDI. Unlike previous studies, this study uniquely combines the effects of FDI, GDP, and renewable energy on carbon emissions within the context of South Korea’s ambitious carbon neutrality commitment by 2050. Applying a robust ARDL model provides nuanced insights into the interactions between economic factors and sustainability efforts, offering actionable data to policymakers aiming to balance economic and environmental goals. These results highlight the importance of sustainable policies that balance economic growth and environmental preservation, especially in the context of South Korea’s carbon neutrality goals.