Using cointegration and error correction modeling techniques, this paper
examines the dynamics of carbon dioxide (CO2) emissions in relation
to economic growth, energy consumption, trade openness, urbanization and
foreign direct investments in the case of the Philippines. The study finds that
1) economic growth and CO2 emissions have a significant positive
linear relationship, suggesting that income growth policies must be subject to
reasonably stringent environmental constraints related to CO2 emissions; 2) CO2 emissions are inelastic with respect to energy use
in the short run, but its response becomes elastic in the long-run; and 3) CO2 emissions have a positive elasticity with respect to FDI which conforms with
the Pollution Haven hypothesis.
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