Economic and Environmental Drivers of Carbon Emissions in Asia: Granger Causality Insights From Foreign Investment, Inflation, and Ecological Footprint

ABSTRACT Rising carbon emissions cause critical challenges to sustainable development, particularly in Asia which accounts for a substantial share of global emissions. The study investigates the short‐run causal relationships between foreign direct investment, inflation, ecological footprint, and carbon emissions across 27 Asian countries (final analytical sample) over the period 2000–2023. Utilizing country‐specific VAR‐based Granger causality analysis, the study captures heterogeneous sustainability economic interactions without imposing uniform panel assumptions. The results reveal diverse unidirectional and bidirectional causality patterns, highlighting how macroeconomic pressures and environmental constraints jointly shape emission outcomes. These findings underscore the importance of sustainable investment, energy price management, and institutional capacity in supporting sustainable communities and enhancing knowledge‐driven sustainability transitions. From a managerial and policy perspective, the results provide actionable insights aligning with investment decisions, macroeconomic management, and environmental governance with the sustainable development goals, particularly SDG 13 (climate action), while recognizing country‐specific development pathways.