The Impact of Foreign Direct Investment on Carbon Emissions in Economies Along the Belt and Road

Abstract

With China’s emergence as a major global economy, its involvement in tackling climate change and fostering sustainable growth has garnered considerable focus. What impact does global direct investment have on carbon emissions within Belt and Road economies? This study innovatively utilizes a quantile regression model to analyze the varied impacts of international direct investment across distinct carbon emission quantiles, further delving into the conditional probability distribution of the dependent variable to provide a strong theoretical basis for precise policy-making by relevant departments and integrating time and space delays in examining the effects of carbon reduction strategies within the Belt and Road Initiative. Furthermore, this study aims to concentrate its research efforts on the host nations. Findings from this study indicate that global direct investments could escalate carbon emissions in economies with lower carbon emissions; yet, with the rise in the host nation’s carbon emissions, the ripple effect of international direct investments in green technology becomes increasingly evident. Empirical evidence indicates that global direct investment in Belt and Road economies demonstrates a significant mitigating effect on carbon emissions, thereby amplifying the decarbonization benefits associated with such cross-border capital flows.