Relationship between GDP, FDI, renewable energy, trade openness, innovation, and CO2 in Slovakia: New insights from ARDL methodology

This paper examines the dynamic and long-term relationships between real gross domestic product (GDP), foreign direct investment (FDI), renewable energy consumption (RE), trade openness (TO), innovation (INN), and carbon dioxide emissions (CO 2 ) in Slovakia. Using the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration and error correction modelling, we explore whether clean energy and innovation can decouple growth from emissions in a small open European economy integrated into global value chains. Annual data are modelled with careful attention to lag selection, structural breaks, persistence, and endogeneity. We complement baseline ARDL with robustness checks (dynamic ARDL simulations, FMOLS/DOLS, and Toda–Yamamoto causality). The results template indicates: (i) a cointegrating relationship among the variables; (ii) in the long run, RE and INN are associated with lower CO 2 intensity, while TO and FDI exert mixed effects depending on composition and technological spillovers; and (iii) short-run dynamics are dominated by adjustment toward equilibrium with moderate speed of correction. We discuss the policy implications for Slovakia's green transition in light of its EU climate targets. • ARDL analysis confirms a long-run link between growth, energy, innovation, and CO 2 • GDP, FDI, and trade openness increase CO 2 emissions in Slovakia in the long run • Renewable energy significantly reduces CO 2 emissions in both short and long run • INN mitigates emissions by strengthening energy efficiency and technique effects • Results support partial decoupling under EU-driven energy transition policies