Environmental degradation in France: The effects of FDI, financial development, and energy innovations

By Muhammad Shahbaz, Muhammad Ali Nasir, David Roubaud. Energy Economics, 2018

1,085 citations recorded by the source corpus.

This paper explores the determinants of carbon emissions in France by accounting for the significant role played by foreign direct investment (FDI), financial development, economic growth, energy consumption and energy research innovations in influencing CO2 emissions function. In this endeavour, we employ the novel SOR (Shahbaz et al. 2017) unit root test on French time series data over the period 1955–2016 to examine the order of integration in the presence of sharp and smooth structural breaks in the variables. We also apply the bootstrapping bounds testing approach, recently developed by McNown et al. (2018), to investigate the presence of cointegration and the empirical findings underscore the presence of cointegration among the time series. Moreover, we find that FDI has a positive impact, while energy research innovations have a negative impact, on French carbon emissions. Financial development lowers carbon emissions, thereby improving the French environmental quality. FDI degrades the environment, and thus supports the pollution-haven hypothesis in France. Similarly, financial development suggests that financial stability is a required condition for improving environmental quality, so are energy research innovations. Contrarily, energy consumption is positively linked with carbon emissions. However, the relationship between economic growth and CO2 emissions is an inverted-U, which is a validation of the environmental Kuznets curve (EKC).

Subfields: Economics and Econometrics, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/a77da126dfab30c0a95d74b3a027a94693c67ab2

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Citations in the corpus

Nexus between Financial Development, Renewable Energy Consumption, Technological Innovations and CO2 Emissions: The Case of India (2021, background): “By bringing energy advancements and energyefficient equipment, technological innovations could have an impact on environmental performance [56,57].”
Does financial development mitigate carbon emissions? Evidence from heterogeneous financial economies (2020, background): “As a result, this study follows Acheampong (2019) and Shahbaz et al. (2018) to augment Eq.”
Public-private partnerships investment in energy as new determinant of CO2 emissions: The role of technological innovations in China (2020, background): “The empirical findings of ADF unit root test may be ambiguous due to ignorance of structural breaks occurring in the series (Shahbaz et al. 2018).”
Does financial development influence renewable energy consumption to achieve carbon neutrality in the USA (2021, background): “…existing literature on environmental effects of financial development where the evidence on finance-environment nexus is inconclusive (e.g., Nasir et al. 2019, Nguyen et al. 2021, Salahuddin et al. 2018, Shahbaz et al. 2018, Charfeddine and Khediri 2016, Çoban and Topcu 2013, Tamazian et al. 2009).”
Resource rents and inclusive human development in developing countries (2021, background): “While some authors opine that natural resources lead to financial development especially in high income countries (Shahbaz et al., 2018; Gokmenoglu and Rustamov, 2019), others report a negative relation especially for developing countries (Guan et al., 2020; Asif et al., 2020).”
How renewable energy consumption contribute to environmental quality? The role of education in OECD countries (2020, result): “The similar results are found Sapkota and Bastola (2017) for 14 Latin America countries, Balaguer and Cantavella (2018) for Australia, and Sinha and Shahbaz (2018) for India.”