Abstract

This study investigates the effects of foreign direct investment (FDI), industrialization, trade openness, and electricity consumption on South Africa’s CO₂ emissions from 1990 to 2022. In the analysis, based on the ARDL bounds testing, we examine both short-term and long-term relationships. The findings confirm a stable long-run cointegrating relationship. In the short run, both FDI inflows and trade expansion have a large impact on enhancing CO₂ emissions, which are consistent with the Pollution Haven Theory. But on the other side, industrial value-added and electricity consumption play an important part in reducing emissions throughout the long and short terms, implying the efficiency of productionprocesses and the clean use of energy. No evidence of heteroskedasticity, and the CUSUM tests confirm parameter stability, as the diagnostic tests report no evidence of heteroskedasticity or serial correlation. The results indicate that policymakers should promote green FDI, incorporate environmental safeguards into trade policies, and diversify South Africa’s energy mix to achieve green and emission-reducing economic growth.

Keywords: CO₂ emissions, Foreign direct investment, Industrial activity, Trade openness, Energy consumption