The role of foreign direct investment in the renewable electricity generation and economic growth nexus in Portugal: a cointegration and causality analysis

João Paulo Bento Cerdeira
Authors registered in the RePEc Author Service: João Paulo Cerdeira Bento

MPRA Paper from University Library of Munich, Germany

Abstract: This study attempts to investigate a supply function for electricity in Portugal through cointegration and causality analysis over the sample period of 1970 to 2008 to test hypotheses related to the electricity-economic growth nexus in the literature. Evidence is found in favour of cointegration among electricity generation from renewable sources, real gross domestic product, inward foreign direct investment, carbon emissions from electricity production and population size in Portugal by using the bound testing approach to cointegration and error correction models developed within an autoregressive distributed lag (ARDL) framework. Evidence from Granger causality tests show that unidirectional causality is running from renewable electricity production to foreign direct investment in the short-run, and indicate the presence of bilateral causality among renewable electricity production, inward foreign direct investment, real income and population. The joint short- and long-run Granger causality tests provide further support for the feedback hypothesis. These findings have important policy implications, since the promotion of appropriate structural policies aiming at attracting foreign direct investment can induce conservation and efficient electricity use without obstructing economic growth. The promotion of foreign direct investment is crucial in boosting Portugal’s socio-economic development towards a more efficiency-orientated and less resource-depleting economy.

Keywords: Renewable electricity production; Economic growth; Foreign direct investment; ARDL cointegration; Granger causality; Portugal (search for similar items in EconPapers)
JEL-codes: C32 Q43 (search for similar items in EconPapers)
Date: 2012-09-24
New Economics Papers: this item is included in nep-ene and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/41533/1/MPRA_paper_41533.pdf original version (application/pdf)

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:pra:mprapa:41533

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().