The impact of financial market development and foreign direct investment on carbon intensity from oil, gas, gas flaring, and cement emissions in GCC Countries: A spatial analysis

Financial markets and foreign investments could play an effective role in determining the environment and income of GCC resource-rich economies. Therefore, the effects of Financial Market Development (FMD) and Foreign Direct Investment (FDI) on Carbon Intensity (CI) from oil, gas, gas flaring, and cement sectors are tested in the GCC region by employing the Spatial Durbin Model for the period 1980–2022. The Environmental Kuznets Curve (EKC) is corroborated in the models of CI from the cement, gas, and gas flaring sectors. FMD raises CI from gas, gas flaring, and cement emissions in local and neighboring economies and the whole GCC region. However, FMD reduces CI from the oil emissions in the indirect and total effects. Moreover, FDI reduces CI from the cement sector in local economies and also reduces CI from the cement, oil, and gas sectors in neighboring economies and the whole GCC region. Urbanization increases CI from gas, gas flaring, and cement emissions in local and neighboring economies and the whole GCC region. The study suggests promoting FDI for sustainable growth and reducing the flow of financial resources to the energy and cement sectors. Moreover, urbanization should be controlled to reduce its environmental effects.