Foreign Direct Investment Settlement, Novel Energy Methods and CO2 Emissions: Evidence From United Arab Emirates

Abstract

This paper explores the relationship between foreign direct investment (FDI) settlement, the contribution of clean energy and CO2 emission in United Arab Emirates (UAE). Using the time-series estimation methods, this study opts cointegration test to find the long-run association between FDI and CO2. Furthermore, energy source of UAE is based on fossil fuel, we employed fixed-effect regression model to determine the effect of FDI after controlling several other factors that causes CO2 emission to find the magnitude. After obtaining the data from 1971-2019, we find that FDI plays a significant role in CO2 emission in the economy. Another key contribution of this paper is regarding clean energy. The results confirm that clean energy helps to reduce the CO2 emissions. The findings of this research endorses the initiative of the UAE launched ‘Energy Strategy 2050’. This implies that UAE is moving in a right direction to curb the CO2 emission by increasing the contribution of clean energy in the total energy mix and would achieve this target through an effective implementation of the ‘Energy Strategy 2050’.