The Impact of Tourism, Foreign Direct Investment, Trade, Economic Growth, and Renewable Energy on Carbon Emissions: The Case of Mediterranean Countries

Abstract

In this study, we examine the influence of international tourism, trade, foreign direct investment, economic growth and renewable energy consumption on CO2 emissions in 17 Mediterranean countries, spanning the period 1995–2018, by using heterogeneous panel estimation techniques. The findings show that economic growth has a strong impact on carbon dioxide emissions. Our results are in favor of the existence of an inverted U-shaped Environmental Kuznets curve (EKC) in Mediterranean countries. In addition, the econometric results indicate that international tourism, trade openness, FDI, and renewable energy consumption have a negative impact on carbon dioxide emissions. Moreover, the Dumitrescu and Hurlin panel Granger causality test suggests that there is a two-way causality between CO2 emissions and the other variables explored (international tourism, openness, FDI, renewable energy consumption and real income) and a oneway causality running from renewable energy consumption and trade openness to real income. Therefore, the development of international trade in the field of renewable energies and the exploitation of these
energies in the field of tourism and FDI can be favorable to economic growth and the reduction of carbon dioxide emissions.