How Can Foreign Direct Investment Trigger Green Growth? The Mediating and Moderating Role of the Energy Transition

Rafaela Vital Caetano, António Cardoso Marques () and Tiago Lopes Afonso
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Rafaela Vital Caetano: Management and Economics Department, University of Beira Interior, 6201-001 Covilhã, Portugal
António Cardoso Marques: Management and Economics Department, University of Beira Interior, 6201-001 Covilhã, Portugal
Tiago Lopes Afonso: Management and Economics Department, University of Beira Interior, 6201-001 Covilhã, Portugal

Economies, 2022, vol. 10, issue 8, 1-14

Abstract: Developed countries have the resources/technologies to combat pollution even at the expense of economic growth. Developing countries are in a less fortunate position. Foreign Direct Investment (FDI) can be a tool for developed countries to transfer polluting industries, which increases pollution in host countries. However, as FDI might reduce pollution by reducing energy consumption, the pollutant effect might also be influenced. Therefore, this study examines the mediating effect of energy consumption on the impact of FDI on pollution, and the role of FDI to attain Green Growth via energy transition. The main findings indicate that FDI impacts pollution through energy consumption and that energy transition plays a vital role in reducing this mediating effect. Developing countries appear to use non-renewable energy to fill energy demand. In both groups of countries, FDI is a driver of Green Growth. However, developing countries require larger efforts to achieve Green Growth through the energy transition.

Keywords: energy transition; Foreign Direct Investment; Green Growth (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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