Dynamic connection between inward foreign direct investment, renewable energy, economic growth and carbon emission in Ch
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RESEARCH ARTICLE
Dynamic connection between inward foreign direct investment, renewable energy, economic growth and carbon emission in China: evidence from partial and multiple wavelet coherence Hira Arain 1 & Arshian Sharif 2,3 & Bilal Akbar 4 & Md. Yamin Younis 4 Received: 9 March 2020 / Accepted: 8 April 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract This paper presents a fresh understanding of the vigorous connection between inward FDI, renewable energy consumption, economic growth and carbon emission in the Chinese economy employing novel Morlet wavelet analysis. Wavelet correlation, continuous wavelet transform and partial and the multiple wavelet coherence analyses are applied on variables under study for data acquired during the period 1979 to 2017. The outcome of these analyses reveals that the connections among the variables progress over frequency and time. From the frequency domain point of view, the current study discovers noteworthy wavelet coherence and robust lead and lag linkages, although time domain reveals inconsistent associations among the considered variables. The wavelet analysis according to economic point of view supports that inward foreign direct investment (FDI) and renewable energy consumption help to enhance economic condition in Chinese economy. The results also suggested that inward FDI enhances the environmental degradation in medium and long run in China. The results emphasize the significance of having organized strategies by the policymakers to cope with huge environmental degradation occurred for a couple of decades in China. Keywords Inward foreign direct investment . Renewable energy . Carbon emission . China . Partial and multiple wavelet coherence
Introduction Responsible editor: Nicholas Apergis * Hira Arain [email protected] Arshian Sharif [email protected] Bilal Akbar [email protected] Md. Yamin Younis [email protected] 1
Department of Finance, School of Economics & Management, Beihang University (BUAA), Beijing, China
2
Othman Yeop Abdullah graduate school of business, Universiti Utara Malaysia, Kedah, Malaysia
3
Department of Business Administration, Eman Institute of Management and Sciences, Karachi, Pakistan
4
Department of Mechanical Engineering, Mirpur University of Science and Technology (MUST), Mirpur-10250, (AJK), Pakistan
The open-door policy in 1978 brought rapid economic development for China that increased demand for energy, resulting in exponential expansion of the energy sector which resulted increased use of energy consumption especially thermal, which is mostly consist of coal (Fig. 1). As in other countries, fossil fuel combustion is primary cause of anthropogenic CO2 emissions that is related to energy (IPCC 2013), and currently, China is the biggest contributor of global CO2 emissions (Z. Mi et al. 2017, C. Le Que´ re´ et al. 2018) that accounts about ∼ 30% of global emissions (IEA 2018). The increased carbon emission resulted in land degradation, increased air, aquatic and soil pollution o
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