Energy Consumption and Inclusive Growth in Sub-Saharan Africa: Does Foreign Direct Investment Make a Difference?

John Abdulai Jinapor, Joshua Yindenaba Abor and Michael Graham

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the potential impact of energy consumption and foreign direct investment (FDI) on inclusive growth in 32 Sub-Saharan Africa (SSA) countries from 2000 to 2019. The results from the 2-stage system generalised method of moment (GMM), reveal that energy consumption induces inclusive growth. The results also show a substantial impact of non-renewable energy, relative to renewable energy, on inclusive growth. Additionally, the results further reveal that FDI has a non-linear relationship with inclusive growth, where FDI dampens inclusive growth to a certain point and begins to induce it after that point. Moreover, FDI effectively forms synergies with energy consumption towards promoting inclusive growth in SSA. The interactive term results revealed that FDI forms synergies with both renewable and non-renewable energy to promote inclusive growth in SSA. We recommend that African leaders focus on attracting FDIs towards financing their energy needs, particularly in the area of low-carbon or renewable energy sources, by leveraging private sector capital investments to achieve inclusive growth whilst attaining sustainable development.

Keywords: SSA; Renewable Energy Consumption; Non-Renewable Energy Consumption; FDI; Inclusive Growth (search for similar items in EconPapers)
JEL-codes: F20 O20 Q4 (search for similar items in EconPapers)
Date: 2024, Revised 2024-06-06
New Economics Papers: this item is included in nep-ene, nep-env, nep-fdg and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:121143

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