Economic Expansion, Energy Choices and Carbon Dioxide Emissions: A Panel Study of South Asia

Subject and purpose of work This research explores how renewable energy consumption (LREC), economic growth (LGDP), industrialization (LIND), foreign direct investment (LFDI), and population growth (LPOP) influence carbon dioxide emissions (LCO2) in South Asia. Materials and methods This study utilizes World Bank data spanning 1990 to 2020 and employs cross-sectional dependence tests, slope homogeneity tests, panel stationarity tests, cointegration tests, the CS-ARDL model, and causality analysis. Results The empirical results show that LFDI and LIND significantly increased emissions, while LGDP and LPOP had no significant impact on carbon emissions. Conversely, LREC effectively reduces emissions in both the immediate and extended periods. The causality test findings indicate that LGDP and LCO₂, LREC and LCO₂, and IND and LCO₂ influence each other in a reciprocal manner. Conclusions Findings bring to light the necessity of transitioning from polluting power sources toward cleaner renewable energy, redirect foreign investment toward green sectors, and promote cleaner industrial production.