Inward foreign direct investment and inclusiveness of growth: will renewable energy consumption make a difference?

Khadijah Iddrisu (), Isaac Ofoeda and Joshua Yindenaba Abor
Additional contact information
Khadijah Iddrisu: Simon Diedong Dombo University of Business and Integrated Development Studies
Isaac Ofoeda: University of Professional Studies
Joshua Yindenaba Abor: University of Ghana Business School

International Economics and Economic Policy, 2023, vol. 20, issue 3, No 1, 367-388

Abstract: Abstract In an effort to achieve shared prosperity or inclusive growth, we investigate whether increasing foreign direct investment (FDI) flows to Africa can foster sustainable development (inclusive growth). Additionally, as the region is endowed with renewable energy, we examine whether renewable energy consumption can directly enhance inclusive growth and (or) complement FDI to enhance inclusive growth. Using 30 Sub-Saharan Africa (SSA) for 21years for the period of 2000–2020, our Generalized Method of Moment (GMM) results suggest that FDI is inclusive growth-enhancing, whereas renewable energy hampers inclusive growth. The high cost of renewable energy technologies in developing countries, such as SSA, has led to low investment in these resources, thereby explaining how renewable energy hampers inclusive growth. However, renewable energy consumption is effective in promoting the impact of FDI on inclusive growth in SSA. This is attributed to the investment opportunities in renewable energy consumption in SSA, thereby attracting foreign investors. Globally, renewable energy received about $85.2 billion in FDI in 2022, promoting job creation, revenue growth, and affordable energy access. We suggest that policymakers should attract sufficient FDI because higher levels of FDI promote inclusive growth.

Keywords: FDI; Inclusive growth; Renewable energy; GMM; SSA; AfCFTA (search for similar items in EconPapers)
JEL-codes: F15 F6 R58 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s10368-023-00562-z Abstract (text/html)
Access to full text is restricted to subscribers.

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:kap:iecepo:v:20:y:2023:i:3:d:10.1007_s10368-023-00562-z

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10368/PS2

DOI: 10.1007/s10368-023-00562-z

Access Statistics for this article

International Economics and Economic Policy is currently edited by Paul J.J. Welfens, Holger C. Wolf, Christian Pierdzioch and Christian Richter

More articles in International Economics and Economic Policy from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().