The Effect of Tourism, Foreign Direct Investment and Growth on CO ₂ Emissions: Panel Data Analysis

Abstract

Natural resources provide the foundation for the growth and competitiveness of tourist destinations; hence, changes in these resources might affect tourism's development. The world is attempting to speed up its policies to decrease emissions of greenhouse gases, and the costs of these efforts are particularly difficult for lowdevelopment nations to bear. As a step in this direction, the purpose of the research is to analyze the impacts of foreign direct investment, tourism, and economic development on the deterioration of the environment in the countries of Morocco, Zimbabwe, Mauritius, and Ethiopia, all of which receive significant amounts of foreign capital inflows. In the section of the research devoted to empirical analysis, the authors investigated the impact that tourism had on CO2 emissions, as well as gross domestic product and foreign direct investments, in the countries of Morocco, Zimbabwe, Mauritius, and Ethiopia between the years 1995 and 2019. The panel analysis technique was employed in the time series analysis to investigate the link between the variables. The Hausman test was used to validate the analysis between the random and fixed effect models in determining the causal association. It has been established on the basis of the findings of the investigation; it has been established that tourism and CO2 have a considerable positive and negative impact on one another.

Keywords: Tourism; environmental pollution; CO2 emissions; foreign direct investments; time series; panel data analysis