International trade, Chinese foreign direct investment and green innovation impact on consumption-based CO2 emissions: empirical estimation focusing on BRI countries.

ABSTRACT

Recently, The literature has directed concern towards the consumption-based carbon emission (CCE), which is adjusted for trade. This study aims to examine trade, Chinese foreign direct investment (CFDI), and green innovation (GI) to portray the overall impact of the factors influencing CCE in belt and road initiative (BRI) countries over the period 2003 to 2018. By employing the cross-sectional autoregressive distributed lag (CS-ARDL) model, the findings reveal that CFDI and imports positively influence the CCE both in the long run as well as in the short run. The results of GI and exports are found negatively significant in the host countries. The study further employs augmented mean group (AMG) and common correlated mean group (CCEMG) estimators for robustness. Like CS-ARDL, the outcomes of both estimators reveal the same findings that imports and CCE hold a positive relationship in all sample regions. Overall, the study exposes that strategies related to CCE accredited by trade and FDI should recognize their environmental repercussions and implement policies that are environmentally friendly such as green innovation and renewable energy sources to achieve a sustainable development.