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The increase in international economic integration in the past decades, fueled by the amplified trade and financial flows around the world changed the size and scope of benefits that international investors may obtain from holding diversified portfolios. Our paper investigates the impact of increased capital market co-movements between emerging and developed markets from European Union, in the following directions: (1) analysis of cross-market correlations and identification of trends in cross-market correlations; (2) analysis of the risk-return performance of European portfolios formed of developed and emerging markets assets. Our approach attempts to investigate whether a diversified portfolio on a European basis, which includes developed and emerging EU markets, offers euro-based investors a better risk and/or return as compared to a purely developed EU markets portfolio. If this were true, then EU emerging markets represent diversification opportunities for eurobased investors. [ABSTRACT FROM AUTHOR]

The European Union's environmental goal by 2050 is to become the first climate-neutral continent in the world. This means specific efforts for diversifying the energy mix and investing in low-carbon energy. Our study investigates the nexus among carbon emissions, energy consumption and mix, and economic growth in a modified framework that includes the contribution of inward foreign direct investments and international trade to lowering air pollution. We have used a two-step approach to explore in more detail the links between these variables in 24 EU countries over the period 1995–2018, followed by a panel VECM analysis. Our results indicate that there is a unidirectional link between economic growth and CO2 emissions, which should imply a decoupling of environmental improvement measures from the pace of economic growth. We also find bidirectional causal relationships between low-carbon energy shares in consumption and CO2 emissions, as well as between low-carbon energy share in consumption and GDP per capita, which confirms both pollution haven and the halo effect hypotheses for FDI on gas emissions. However, in the long term, FDI, exports, and imports have positively impacted the reduction in CO2 emissions; therefore, stronger EU investment and trade integration should be promoted to improve the quality of the environment. [ABSTRACT FROM AUTHOR]