The nexus among foreign direct investment in renewable electricity industry, renewable electricity production, and economic growth in Africa

Ahmed Rashed, Chen-Chen Yong and Siew-Voon Soon

Cogent Economics & Finance, 2022, vol. 10, issue 1, 2001141

Abstract: Africa is still struggling to mitigate its electricity insecurity issues. This situation renders foreign direct investment in the renewable electricity industry (FDIREI) and renewable electricity production (REP) to become simultaneously important to Africa. Using a novel dataset of FDIREI, this paper examines the existence and nature of cointegration and causality nexuses among FDIREI, REP, and economic growth (GDP) in 32 African countries over 2003–2019. For methodological robustness purposes; GDP is added. By applying the panel vector autoregression model based-Granger causality test and a static panel data model, which are followed by robustness tests, more informative results are reported. Importantly, we find evidence of the growth hypothesis between REP and GDP, as a unidirectional Granger causality is seen from REP to GDP. Further, the neutrality hypothesis is confirmed among the remaining variables. This left us with the importance of REP in revitalizing African countries’ economic growth. All facets of REP thus should be enhanced.

Date: 2022
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DOI: 10.1080/23322039.2021.2001141

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