Does environmental awareness determine GDP growth ? evidence from Singapore based on ARDL and NARDL approaches

Global environmental pollution has been rapidly growing over the past few years, causing global warming and drastic climate changes. There are efforts carried out by individuals and entities to minimize the level of pollution worldwide. This study attempts to investigate the nexus relationship between carbon emissions, FDI inflows, exports and GDP. Having an open economic setting, heavy reliance on FDI and exports, as well as high rate of carbon emissions, Singapore appears to suit the study. The analysis is carried out using standard time-series techniques, supplemented by ARDL and NARDL tests on annual data spanning from 1970 to 2017. The empirical results tend to suggest that the nexus relationship is statistically significant, the rate of carbon emissions really influences GDP through FDI and that the CO2 emission is the most exogenous among the variables. This study is consistent with the “no pain all gain” slogan by which implementation of policies related to carbon emissions is expected to expand GDP growth due to the awareness of investors regarding environmental issues. Our findings are of great importance to the development policies in countries facing similar challenges.