The impact of CO₂ emission on FDI is well debated in the existing literature. Generally, it is found that in developing nations FDI increases as CO₂ emission increases. The research aims at finding the impact of CO₂ emission and GDP growth on the net inflow of FDI for the NAFTA area. Regression analysis has been conducted for the empirical analysis. The results of the regression analysis indicate that GDP growth has no role to play in determining the net inflow of FDI. However, CO₂ emission has positive impact on the net inflow of FDI for the NAFTA countries.

KEY WORDS: Pollution, CO₂ emission, OLS, FDI, Regression