The asymmetric relationship between foreign direct investment, oil prices and carbon emissions: evidence from Gulf Cooperative Council economies

Figures & data

Figure 1. CO₂ emissions (metric tons per capita) in the Gulf Cooperative Council 2000 to 2016.Source: World Development Indicators, World Bank

Figure 2. Foreign direct investment inflows to the Gulf Cooperative Council of Countries 2000 to 2016.Source: United Nations Conference on Trade and Development (UNCTAD)

Figure 3. West Texas Intermediate crude oil prices 2000 to 2016.Source: Federal Reserve Economic Data

Table 1. Description of the variables used in the study for the period 1999 to 2016

Variables	Measurements	Sources	Expected sign
CO2 emissions (CO2)	Metric tons per capita	World Development Indicators, World Bank
Oil price (OP)	West Texas Intermediate crude oil prices	Federal Reserve Bank of St. Louis	-
Trade openness (TRADE)	The ratio of international trade (exports + imports) to GDP	World Development Indicators, World Bank	+
Financial development (FD)	Financial development index	Financial development index database, IMF	+
Economic development (GDP)	Log of GDP	World Development Indicators, World Bank	+
Urbanization (URBAN)	Urban population (% of total population)	World Development Indicators, World Bank	+
Foreign direct investment (FDI)	Log of FDI Inflows	United Nations Conference on Trade and Development (UNCTAD)	+

Table 2. Summary statistics of the variables for the period 1999 to 2016

Variables		Mean	Std. Dev.	Min	Max	Observations
CO2	Overall Between Within	26.146	12.813 12.937 4.839	8.839 13.758 12.287	67.310 50.246 43.209	N = 108 n = 6 T = 18
TRADE	Overall Between Within	107.928	29.819 26.687 17.034	57.846 77.485 60.110	191.87 146.89 152.90	N = 108 n = 6 T = 18
GDP	Overall Between Within	10.349	.5004 .53153 .1132	9.7206 9.8018 10.032	11.151 11.07 10.656	N = 108 n = 6 T = 18
FDI	Overall Between Within	6.911	1.998 1.2917 1.609	1.286 5.1856 2.3184	10.582 8.4655 9.815	N = 108 n = 6 T = 18
URBAN	Overall Between Within	87.637	9.0980 9.7293 1.7757	71.509 74.941 84.204	100 99.876 95.195	N = 108 n = 6 T = 18
OP	Overall Between Within	60.146	27.506 0 27.506	19.34 60.146 19.34	99.67 60.1461 99.67	N = 108 n = 6 T = 18
FD	Overall Between Within	.4304	.0772 .0544 .05900	.27287 .3677 .2929	.58539 .53068 58,494	N = 108 n = 6 T = 18

Table 3. Panel unit root tests of the variables for the period 1999 to 2016

Test method	CO2 emissions	Trade openness	GDP	FDI	Urbanization	Oil prices	Financial development
Levin, Lin and Chu t*	- −2.7844^**a	−3.984^***b	−2.6497^***a	−2.1129^**a	−28.5783*^**a	−1.4295^**b	−2.2038^**a
Breitung t-stat	−4.0704^***b	- −4.0120^***b	−2.7007 ^***b	−5.5381^***b	−3.0087^***a	−6.2866^***b	−1.9635^**a
Harris-Tzavalis rho	0.4288 ^**a	0.2373 ^***b	0.4105 ^**b	0.4250^**a	0.9516^**b	−0.0929^***b	−0.0467^***b
Im, Pesaran and Shin W-stat	−2.4645^***a	- −3.8970 ^***b	−3.5585^***b	−1.7040^**a	−1.9169^**b	−5.3913^***b	−1.8288**
ADF Fisher Chi-square	2.6316^***a	5.1690^***b	9.3765^***b	19.1425^***b	5.8360 ^***b	14.010^***b	12.5694^***b
Hadri z-stat	6.6615^***a	−2.629^**b	7.4231^***a	8.2248^***a	5.1230^***a	9.4409^***a	4.9645^***a
Pesaran CADF	−2.698^**a	−2.629^**b	−2.052^**a	−2.692^**a	−2.881^***a	−2.610^**b	−2.806^***b

A and b denote the stationarity at level and first difference respectively. While, *** p < 0.01, ** p < 0.05, * p < 0.1

Table 4. Linear panel ARDL results of the variables for the period 1999 to 2016

	(1)	(2)
Variables	CO2 emissions	CO2 emissions
TRADE	−.1721*** (.0287)	−.1599*** (.0277)
LNGDP	6.321** (2.945)	8.076*** (3.088)
URBAN	.0008 (.1585)	.0248 (.1444)
FDI	.8478*** (.1700)	.9505*** (.2127)
OP	.0377*** (0113)	.0394*** (.0109)
FD		−3.768 (5.994)
D. TRADE	.2176* (.1149)	.2167 (.1365)
D. LNGDP	14.71 (18.51)	16.08 (19.32)
D. URBAN	−54.57 (50.59)	−35.27 (26.02)
D. FDI	.3979 (.6132)	.6626 (1.017)
D.OP	−.0427*** (.0143)	−.0396** (.0160)
D.FD		9.725 (12.64)
Constant	−10.35* (5.97)	−28.85*** (9.665)
Ec	−.6726*** (.2245)	−.6834*** (.2217)
Hausman test	4.36 (p = 0.498)	3.35 (p = 0.5008)
Observations	102	102

P- values are reported in parentheses *** p < 0.01, ** p < 0.05, * p < 0.1

Table 5. Foreign direct investment and CO₂ emissions (panel NARDL analysis results) of the variables for the period 1999 to 2016

	(2)
VARIABLES	CO2 emissions
TRADE	−.07062* (.0428)
LNGDP	11.44*** (2.743)
URBAN	.6831* (.3961)
FDI	.5642** (.2356)
OP	−.0059 (.0142)
D. TRADE	.0940 (.1200)
D. LNGDP	8.768 (6.178)
D. URBAN	29.11 (38.22)
D. FDI^+	−.0931 (.2270)
D. FDI^−	1.298** (.5159)
D.OP	−.0117 (.0233)
Constant	106.83*** (24.94)
Ec	−.7498*** (.1971)
Hausman test	8.58 (p = 0.1271)
Observations	102

P- values are reported in parentheses *** p < 0.01, ** p < 0.05, * p < 0.1

Table 6. Oil pricesOil prices and CO₂ emissions and CO₂ emissions (panel NARDL analysis results) of the variables for the period 1999 to 2016

	(2)
VARIABLES	CO2 emissions
TRADE	−.1772*** (.0312)
LNGDP	13.57*** (2.487)
URBAN	.2474 (.2053)
FDI	.8041*** (1733)
OP^+	.0166 (.0103)
OP^−	.0445*** (.0142)
D. TRADE	.2077 (.1157)
D. LNGDP	9.627 (18.61)
D. URBAN	−76.91 (69.09)
D.FDI	.3038** (.6218)
D.OP	−.0352 (.0145)
Constant	−81.26*** (16.76)
Ec	−.8043*** (.1898)
Hausman test	0.13 (p = 0.99)
Observations	102

P- values are reported in parentheses *** p < 0.01, ** p < 0.05, * p < 0.1