Dynamic effects of foreign direct investment, globalization, economic growth, and energy consumption on carbon emissions in Mexico: An ARDL approach

Due to the global threat of climate change, investigating the interplay between environmental factors and environmental quality is crucial for effective policy implementation to achieve environmental sustainability. This study examines the influence of economic growth, energy utilization, foreign direct investment (FDI), and globalization on carbon dioxide (CO₂) emissions in Mexico from 1970 to 2022. By adopting the Autoregressive Distributed Lag (ARDL) method, it has been observed that a 1% boost in GDP and energy use contributes to a 1.05% and 1.41% surge in Mexico's carbon emissions in the long run, while 1.81% and 1.85% increase in the near term. Instead, a 1% rise in FDI and globalization have a favorable implication on Mexico's ecosystem level by reducing 0.5% and 0.03% carbon emissions in the long run while 0.28% and 0.01% fall in the near term. The results would help policymakers put the right policies into place to achieve the Sustainable Development Goals (SDGs) through the development of renewable energy, environmental investments, a low-carbon economy, and international cooperation for the transfer of green technologies.