Does Foreign Direct Investment Influence Renewable Energy Consumption? Empirical Evidence from South Asian Countries

Xueqing Kang, Farman Ullah Khan, Raza Ullah, Muhammad Arif, Shams Ur Rehman and Farid Ullah
Additional contact information
Xueqing Kang: Department of Financial Engineering, School of Economics, Sichuan University, No. 24, South Section 1, Yihuan Road, Chengdu 610065, China
Farman Ullah Khan: Department of Management Sciences, COMSATS University Islamabad, Islamabad 45550, Pakistan
Raza Ullah: Department of Management Sciences, Islamia College University, Peshawar 25120, Pakistan
Muhammad Arif: Department of Management Sciences, University of Swabi, Swabi 23430, Pakistan
Shams Ur Rehman: Department of Management Science, Institute of Business and Management Sciences (IBMS), University of Agriculture, Peshawar 21530, Pakistan
Farid Ullah: Department of Financial Engineering, School of Economics, Sichuan University, No. 24, South Section 1, Yihuan Road, Chengdu 610065, China

Energies, 2021, vol. 14, issue 12, 1-15

Abstract: In selected South Asian countries, the study intends to investigate the relationship between urban population (UP), carbon dioxide (CO 2 ), trade openness (TO), gross domestic product (GDP), foreign direct investment (FDI), and renewable energy (RE). Fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) models for estimation were used in the study, which covered yearly data from 1990 to 2019. We used Levin–Lin–Chu, Im–Pesaran–Shin, and Fisher PP tests for the stationarity of the variables. The outcomes of the panel cointegration approach looked at whether there was a long-run equilibrium nexus between selected variables in Pakistan, Bangladesh, India, and Sri Lanka. The FMOLS approach was also used to assess the relationship, and the results suggest that there is a significant and negative nexus between FDI and renewable energy in south Asian nations. The study’s findings reveal a strong and favorable relationship between GDP and renewable energy use. In South Asian nations (Sri Lanka, Pakistan, India, and Bangladesh), the FMOLS and DOLS findings are nearly identical, but the authors used the DOLS model for robustification. According to the findings, policymakers in South Asian economies (Sri Lanka, Pakistan, India, and Bangladesh) should view GDP and FDI as fundamental policy instruments for environmental sustainability. To reduce reliance on hazardous energy sources, the government should also reassure financial sectors to participate in renewable energy.

Keywords: renewable energy; trade openness; FDI; gross domestic product (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
https://www.mdpi.com/1996-1073/14/12/3470/pdf (application/pdf)
https://www.mdpi.com/1996-1073/14/12/3470/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:14:y:2021:i:12:p:3470-:d:573380

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().