Carbon Emissions Across Country Income Groups

Abstract

Main Purpose – The purpose of this study is to examine association between economic growth, foreign direct investment (FDI), renewable energy (RE), and financial development (FD) on carbon emissions across countries with different income classifications. Method - A total of 209 countries from 2000 to 2024 were selected as the subjects of the study and examined through Ordinary Least Squares (OLS) regression. Main Findings - The study shows that economic growth is positively associated with carbon emissions only in lower-middle income countries. FDI is negatively associated with carbon emissions in all income and high-income countries, whereas RE and FD shows a significant positive associated across all models. Theory and Practical Implications – This study demonstrate that the determinants of carbon emissions differ across income groups, highlighting the importance of considering countries development stages when designing environmental policies. Novelty - Unlike prior studies that focus on specific regions, this study provides a comprehensive comparison of the relationships between economic growth, FDI, RE, and FD on carbon emissions across three country income classifications.