Evaluating the Impact of Inward FDI and Economic Growth on Carbon Emissions in South Korea

Strategic Insights -

A recent study published in Foresight and STI Governance has highlighted the complex relationships between inward foreign direct investment (FDI), economic growth, and carbon emissions in South Korea. The researchers used annual time-series data from 1990 to 2021 to investigate the long-term relationships between these variables. The study found a significant impact of FDI and economic growth on carbon emissions in South Korea, emphasizing the need for sustainable investment practices and renewable energy solutions to mitigate the environmental impact of economic growth and FDI.

Key Takeaways:

  • The study used annual time-series data from 1990 to 2021, including carbon emissions (CO2) as the dependent variable and GDP, inward FDI, and renewable energy consumption as explanatory variables.
  • An autoregressive distributed lag (ARDL) bounds test was employed to assess the long-term relationships between the variables, confirming the long-run relationship among FDI, economic growth, renewable energy use, and carbon emissions in South Korea.
  • The study highlighted the importance of integrating sustainable investment practices and renewable energy solutions to mitigate the environmental impact of economic growth and FDI.
  • The results underscored the necessity of balancing economic development with environmental preservation, particularly in the context of South Korea's ambitious carbon neutrality commitment by 2050.
  • The study provided actionable data to policymakers aiming to balance economic and environmental goals.
  • Farrukh Navaz, Arab Open University, was quoted in the study, emphasizing the importance of sustainable policies that balance economic growth and environmental preservation.

Statistics:

  • The study used data from 1990 to 2021, covering a period of 31 years.
  • The researchers used annual time-series data, including 32 observations.
  • The study found a significant impact of FDI on carbon emissions, with a coefficient of 0.143 ( Ark. D).
  • The study also found a significant impact of economic growth on carbon emissions, with a coefficient of 0.231 ( Ark. D).
  • The researchers employed an autoregressive distributed lag (ARDL) bounds test, which confirmed the long-run relationship among FDI, economic growth, renewable energy use, and carbon emissions in South Korea.

Sources:

  • Evaluating the Impact of Inward FDI & Economic Growth Upon the Carbon Emissions of South Korea. Foresight and STI Governance, 2025,19(3).
  • National Research University Higher School of Economics (publisher for Foresight and STI Governance).
  • https://doi-org.sdpl.idm.oclc.org/10.17323/fstig.2025.27981 (free version of the journal article).
  • Farrukh Navaz, Arab Open University (quoted in the study).