Unfolding FDI, Renewable Energy Consumption, and Income Inequality Nexus: Heterogeneous Panel Analysis

Sakib Amin, Yaron Nezleen Amin, Mahatab Kabir Khandaker (), Farhan Khan and Faria Manal Rahman
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Yaron Nezleen Amin: School of Business and Economics, North South University, Dhaka 1229, Bangladesh
Farhan Khan: School of Business and Economics, North South University, Dhaka 1229, Bangladesh
Faria Manal Rahman: School of Business and Economics, North South University, Dhaka 1229, Bangladesh

Energies, 2022, vol. 15, issue 14, 1-21

Abstract: We aim to examine the nexus between Foreign Direct Investment (FDI), Renewable Energy Consumption (REC), and income inequality across selected High-Income Countries (HIC), Upper Middle-Income Countries (UMIC), Lower Middle-Income Countries (LMIC), and Low-Income Countries (LIC). Given the cross-sectional dependency, slope homogeneity, and stationarity properties, we find that the aforementioned variables across all the regions are cointegrated in the long run (LR). For LR estimation, we use the Cross-Sectional-Autoregressive Distributed Lag (CS-ARDL) approach. For the HIC and the UMIC, an increase in FDI increases REC, which in turn causes income inequality to decrease. In the case of LMIC, an increase in REC causes an increase in FDI and decreases income inequality. However, we could not establish a significant relationship with the LIC. We also provide some useful recommendations, such as increased institutional efficiency and promotion of renewable energy investments through higher access to finance.

Keywords: foreign direct investment; renewable energy consumption; income inequality; CS-ARDL; institutional efficiency (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: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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