Club convergence in energy efficiency of Belt and Road Initiative countries: The role of China’s outward foreign direct investment

Hua-Rong Peng, Xiujie Tan, Shunsuke Managi and Farhad Taghizadeh-Hesary

Energy Policy, 2022, vol. 168, issue C

Abstract: Countries along with the Belt and Road Initiative (BRI) differ in geographical location, technological levels, and resource endowment. It is worth paying attention to the evolution of the gap in energy efficiency of BRI countries. Therefore, this study investigated club convergence in total-factor energy efficiency (TFEE) of BRI countries, and the role of China's outward foreign direct investment (OFDI) in TFEE convergence, by adopting panel data over 1996–2019. Results indicate that the TFEE of the BRI countries showed a trend of divergence as a whole, but converged to three convergence clubs with different characteristics of 1) high TFEE and convergence rates (20 countries); 2) middle TFEE and convergence rates (13 countries), 3) low TFEE and convergence rates (27 countries). We also found that China's OFDI in low-carbon industries in BRI countries contributed to the convergence of clubs with high energy efficiency and convergence rates. Moreover, China's OFDI in high-carbon industries showed a pollution halo effect, causing lower energy efficiency countries to converge to the high energy efficiency and convergence rate club.

Keywords: Energy efficiency; Club convergence; Belt and road initiative; Outward foreign direct investment (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:168:y:2022:i:c:s0301421522003640

DOI: 10.1016/j.enpol.2022.113139

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