The effect of foreign direct investment and stock market growth on clean energy use across a panel of emerging market economies

Sudharshan Reddy Paramati, Mallesh Ummalla and Nicholas Apergis ()

Energy Economics, 2016, vol. 56, issue C, 29-41

Abstract: This study investigates the impact of both FDI inflows and stock market developments on clean energy use across 20 emerging market economies, spanning the period 1991–2012. It accounts for cross-sectional dependence and heterogeneity in the analysis and employs robust panel econometric techniques. The empirical results on long-run elasticities display that economic output, FDI inflows and stock market developments have all a significant positive impact on clean energy consumption. Finally, the results on heterogeneous panel non-causality tests indicate the presence of unidirectional causality running from FDI to clean energy consumption in the short-run. For robustness purposes, the paper also estimates long-run elasticities for individual countries, with the findings documenting that both FDI inflows and stock market developments have a considerable positive impact on clean energy uses. The findings urge that both policy makers and governments in these emerging market economies should initiate effective public-private-partnership investments in clean energy projects by providing lucrative incentives, which, in turn, will encourage both domestic and foreign investors to invest more in clean energy projects and, eventually, moving these economies towards sustainable economic growth.

Keywords: Clean energy consumption; FDI inflows; Stock market growth; Emerging market economies (search for similar items in EconPapers)
JEL-codes: F21 O16 P28 Q42 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (147)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:56:y:2016:i:c:p:29-41

DOI: 10.1016/j.eneco.2016.02.008

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