An economic and environmental perspective of the economic growth, emissions, foreign investment and renewables integration in the Black Sea region

The Black Sea countries hold geopolitical, economic and environmental relevance. This paper aims to analyze the relationship between CO₂ emissions, economic growth, urbanization (URB), access to electricity (ACEL), foreign direct investment (FDI) and the integration of renewables (RES) in the region, offering insights from both economic and environmental perspectives.

The paper conducts an econometric analysis using the autoregressive distributed lag (ARDL) model to examine the long-term and short-term relationships between GDP, CO2 emissions, FDI and RES integration in the Black Sea region.

The results indicate a positive long-term relationship between GDP and CO₂ emissions, with a negative coefficient for GDP squared, supporting the environmental Kuznets curve (EKC) hypothesis. FDI is found to reduce CO₂ emissions in the long term, rejecting the pollution haven hypothesis. In the short term, the EKC shows a less distinct and more volatile inverted U-shape relationship between GDP and CO₂ emissions. The error correction term (ECT) is negative and statistically significant, suggesting a 75% correction rate when CO₂ emissions deviate from the long-run equilibrium.

This study provides novel insights by linking economic growth, RES integration, FDI and environmental impact in the Black Sea region. It challenges the pollution haven hypothesis and offers nuanced perspectives on the short-term and long-term environmental impacts of economic activities.