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The Nonlinear Impact of FDI on Economic Growth and Carbon Emissions: Evidence from RCEP Countries
Research Article | Published: 30 January 2026
Journal of Social Systems and Policy Analysis Volume 3, Issue 1, 2026: 1-14
Volume 3, Issue 1, Journal of Social Systems and Policy Analysis
Volume 3, Issue 1, 2026
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Journal of Social Systems and Policy Analysis, Volume 3, Issue 1, 2026: 1-14

Open Access | Research Article | 30 January 2026
The Nonlinear Impact of FDI on Economic Growth and Carbon Emissions: Evidence from RCEP Countries
by
Fang Chen Fang Chen 1 *
1 China–ASEAN School of Economics, Guangxi University, Nanning 530004, China
* Corresponding Author: Fang Chen, [email protected]
DOI: 10.62762/JSSPA.2025.514568
ARK: ark:/57805/jsspa.2025.514568
Received: 15 September 2025, Accepted: 29 September 2025, Published: 30 January 2026  
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Abstract
To investigate the decoupling effect of Foreign Direct Investment (FDI) on carbon emissions, this study employs nonlinear panel models and threshold regression models to analyze the impact of FDI on economic growth and carbon emissions in RCEP member countries from 2000 to 2023. First, the Tapio decoupling model reveals that since 2012, the relationship between economic growth and carbon emissions has predominantly exhibited a weak decoupling state. Second, the results from the nonlinear panel models and threshold models indicate that FDI has a significant "U-shaped" nonlinear relationship with both economic growth and carbon emissions. Specifically, in terms of economic effects, FDI may initially suppress economic growth, but ultimately contribute to it. In terms of environmental effects, FDI initially shows emission reduction benefits, but may eventually intensify carbon emissions. The moderating effect model shows that digital infrastructure significantly weakens these "U-shaped" relationships, reducing the steepness of the original curves. Finally, based on this "U-shaped" relationship and the moderating role of digital infrastructure, policy suggestions are put forward to enhance the synergistic benefits of FDI for both economic development and environmental sustainability. The findings of this study shed new light on the classic debate concerning foreign direct investment (FDI), economic development, and environmental sustainability within the RCEP context.
Graphical Abstract
The Nonlinear Impact of FDI on Economic Growth and Carbon Emissions: Evidence from RCEP Countries
Keywords
FDI
economic growth
carbon emissions
nonlinearity
RCEP
Data Availability Statement
Data will be made available on request.
Funding
This work was supported without any funding.
Conflicts of Interest
The author declares no conflicts of interest.
AI Use Statement
The author declares that no generative AI was used in the preparation of this manuscript.
Ethical Approval and Consent to Participate
Not applicable.
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Cite This Article
APA Style
Chen, F. (2026). The Nonlinear Impact of FDI on Economic Growth and Carbon Emissions: Evidence from RCEP Countries. Journal of Social Systems and Policy Analysis, 3(1), 1–14. https://doi.org/10.62762/JSSPA.2025.514568
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TY  - JOUR
AU  - Chen, Fang
PY  - 2026
DA  - 2026/01/30
TI  - The Nonlinear Impact of FDI on Economic Growth and Carbon Emissions: Evidence from RCEP Countries
JO  - Journal of Social Systems and Policy Analysis
T2  - Journal of Social Systems and Policy Analysis
JF  - Journal of Social Systems and Policy Analysis
VL  - 3
IS  - 1
SP  - 1
EP  - 14
DO  - 10.62762/JSSPA.2025.514568
UR  - https://www.icck.org/article/abs/JSSPA.2025.514568
KW  - FDI
KW  - economic growth
KW  - carbon emissions
KW  - nonlinearity
KW  - RCEP
AB  - To investigate the decoupling effect of Foreign Direct Investment (FDI) on carbon emissions, this study employs nonlinear panel models and threshold regression models to analyze the impact of FDI on economic growth and carbon emissions in RCEP member countries from 2000 to 2023. First, the Tapio decoupling model reveals that since 2012, the relationship between economic growth and carbon emissions has predominantly exhibited a weak decoupling state. Second, the results from the nonlinear panel models and threshold models indicate that FDI has a significant "U-shaped" nonlinear relationship with both economic growth and carbon emissions. Specifically, in terms of economic effects, FDI may initially suppress economic growth, but ultimately contribute to it. In terms of environmental effects, FDI initially shows emission reduction benefits, but may eventually intensify carbon emissions. The moderating effect model shows that digital infrastructure significantly weakens these "U-shaped" relationships, reducing the steepness of the original curves. Finally, based on this "U-shaped" relationship and the moderating role of digital infrastructure, policy suggestions are put forward to enhance the synergistic benefits of FDI for both economic development and environmental sustainability. The findings of this study shed new light on the classic debate concerning foreign direct investment (FDI), economic development, and environmental sustainability within the RCEP context.
SN  - 3068-5540
PB  - Institute of Central Computation and Knowledge
LA  - English
ER  -
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@article{Chen2026The,
  author = {Fang Chen},
  title = {The Nonlinear Impact of FDI on Economic Growth and Carbon Emissions: Evidence from RCEP Countries},
  journal = {Journal of Social Systems and Policy Analysis},
  year = {2026},
  volume = {3},
  number = {1},
  pages = {1-14},
  doi = {10.62762/JSSPA.2025.514568},
  url = {https://www.icck.org/article/abs/JSSPA.2025.514568},
  abstract = {To investigate the decoupling effect of Foreign Direct Investment (FDI) on carbon emissions, this study employs nonlinear panel models and threshold regression models to analyze the impact of FDI on economic growth and carbon emissions in RCEP member countries from 2000 to 2023. First, the Tapio decoupling model reveals that since 2012, the relationship between economic growth and carbon emissions has predominantly exhibited a weak decoupling state. Second, the results from the nonlinear panel models and threshold models indicate that FDI has a significant "U-shaped" nonlinear relationship with both economic growth and carbon emissions. Specifically, in terms of economic effects, FDI may initially suppress economic growth, but ultimately contribute to it. In terms of environmental effects, FDI initially shows emission reduction benefits, but may eventually intensify carbon emissions. The moderating effect model shows that digital infrastructure significantly weakens these "U-shaped" relationships, reducing the steepness of the original curves. Finally, based on this "U-shaped" relationship and the moderating role of digital infrastructure, policy suggestions are put forward to enhance the synergistic benefits of FDI for both economic development and environmental sustainability. The findings of this study shed new light on the classic debate concerning foreign direct investment (FDI), economic development, and environmental sustainability within the RCEP context.},
  keywords = {FDI, economic growth, carbon emissions, nonlinearity, RCEP},
  issn = {3068-5540},
  publisher = {Institute of Central Computation and Knowledge}
}
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