A Study on the Impact of Foreign Direct Investment on Climate Change: Empirical Evidence from the Manufacturing Sector of South Africa

With the rapid economic development and environmental issues. As one of the important key driving factors, foreign direct investment has been argued to be good and a curse to most countries in the world, in particular the developing economies. Despite the contribution to promoting growth, FDI is also an avenue for dumping its consequences on the quality of the environment. Thus, the fundamental approaches to industrial growth, government interventions, and market structure have ignored the main consequences of the common idea of “growth first, clean later” (Quan-Hoang Vuong and Minh-Hoang Nguyen, 2019). This study investigates the relationship between carbon emissions (CO2) and foreign direct investment (FDI), renewable energy consumption (REC), Trade openness (TO), gross domestic products (GDP), non-renewable energy (NRE), manufacturing sector (MS), for a time series of the South Africa country throughout 1990-2020. The debate surrounding environmental concerns remains a national issue to date. To the best of our knowledge, the impact of Foreign direct investment in the manufacturing sector on CO2 emissions has not been completely explored in the previous energy economics literature. In order to further investigate the impact of MSFDI on CO2 emissions, we adopted a series of econometric techniques for the visualization of the available data. We used econometric estimations to verify cross-sectional dependence, co-integration, and stationary between the variables.