Role of foreign direct investment in decomposing of scale and technique effects on China's energy consumption

Muhammad Shahbaz, Avik Sinha, Shabbir Ahmad, Zhilun Jiao and Zhaohua Wang

International Journal of Finance & Economics, 2023, vol. 28, issue 3, 3370-3385

Abstract: This study contributes to the literature of energy economics by divulging the nature of scale and technique effects on energy consumption, considering foreign direct investment (FDI) as one of considerable factors of energy demand. The Chinese provincial data over the period of 2000–2018 are used for empirical analysis. In doing so, we have applied the Westerlund and Edgerton cointegration test using cross‐sectional dependence and structural breaks, and bootstrapped quantile regression to decompose scale and technique effects. The empirical results show the presence of cointegrating association among the model parameters, in the presence of cross‐sectional dependence and structural breaks. The quantile regression results indicate that the scale effect exerted by FDI is negative at lower quantiles of energy consumption, and positive at upper quantiles. Moreover, scale and technique effects exerted by FDI are positive and negative, respectively, at lower quantiles of energy consumption, and negative and positive, respectively, at higher quantiles. The results of this study are expected to help in designing the energy policies in China, keeping the quantum of energy consumption at various provinces in mind, and, thereby, ensuring the sustainability in energy consumption.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1002/ijfe.2597

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:ijfiec:v:28:y:2023:i:3:p:3370-3385

Ordering information: This journal article can be ordered from
http://jws-edcv.wile ... PRINT_ISSN=1076-9307

Access Statistics for this article

International Journal of Finance & Economics is currently edited by Mark P. Taylor, Keith Cuthbertson and Michael P. Dooley

More articles in International Journal of Finance & Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().