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Investigating the Link between Foreign direct investment, Energy consumption and Economic growth in Argentina

Hlalefang Khobai and Nomahlubi Mavikela ()

No 1808, Working Papers from Department of Economics, Nelson Mandela University

Abstract: This paper investigates the relationship between energy consumption, foreign direct investment and economic growth in Argentina employing annual data covering the period from 1970 to 2016. To determine the long run relationship and the direction of causality among the variables, the Autoregressive Distributed Lag (ARDL) bounds testing approach and Vector Error Correction Model (VECM) technique are applied, respectively. The ARDL bounds tests suggested an existence of a long run relationship between energy consumption, foreign direct investments, economic growth and capital. More specifically, it was established that a 1% increase in foreign direct investments lead to a 0.013% increase in energy consumption, while a 1% increase in economic growth boots energy consumption by 0.35% in the long run. The VECM Granger-causality results suggested a unidirectional causality flowing from foreign direct investments and capital to energy consumption. A bidirectional causality flowing between energy consumption and economic growth was also established. This study brings a fresh perspective for the energy policy makers in Argentina.

Keywords: Energy consumption; Foreign direct investment; Economic growth; ARDL; VECM; Argentina. (search for similar items in EconPapers)
JEL-codes: O13 Q43 (search for similar items in EconPapers)
Pages: 25 page
Date: 2018-02, Revised 2018-02
New Economics Papers: this item is included in nep-ene and nep-int
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http://repec.mandela.ac.za/RePEc/mnd/wpaper/paper.1808.pdf First version, 2018 (application/pdf)

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