This study examines the relationship between Foreign Direct Investment (FDI) and CO2 emissions in the Republic of Congo using a Vector Autoregression (VAR) model. The findings indicate that urban population growth is a significant driver of CO2 emissions, emphasizing the environmental impact of urbanization. While FDI exhibits a marginally significant positive effect on GDP, it shows no direct relationship with CO2 emissions or urban population. Variance decomposition analysis suggests that GDP plays a crucial role in attracting FDI, highlighting the potential for economic growth to enhance foreign investment inflows. Additionally, urban population growth significantly contributes to GDP expansion, underscoring the need for policies that align urbanization with economic productivity while mitigating environmental degradation. Although the short-term effects of FDI and GDP on CO2 emissions are minimal, the persistence of emissions necessitates the integration of environmental considerations into long-term economic and urban development strategies.
Cite this paper
Kionga, J. K. M. and Peng, Z. (2025). The Relationship between Foreign Direct Investment (FDI) and CO2 Emissions in the Republic of Congo. Open Access Library Journal, 12, e3170. doi: http://dx.doi.org/10.4236/oalib.1113170.
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