Foreign Direct Investment, Non-Renewable Energy and Economic Growth: An Empirical Analysis from South Africa
Purpose This study aims to examine the connection between foreign direct investment, non-renewable energy, and economic growth in South Africa. Methodology The data was collected from the World Bank’s website from 1990 to 2020. The VECM and Granger causality approaches were employed to evalua...
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| Format: | Article |
| Language: | English |
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BMER Consultancy
2023-12-01
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| Series: | Reviews of Management Sciences |
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| Online Access: | https://rmsjournal.com/index.php/admin/article/view/233 |
| Summary: | Purpose
This study aims to examine the connection between foreign direct investment, non-renewable energy, and economic growth in South Africa.
Methodology
The data was collected from the World Bank’s website from 1990 to 2020. The VECM and Granger causality approaches were employed to evaluate the connection between Economic growth, FDI, and Non-renewable energy.
Findings
The findings show that a long-term equilibrium relationship exists among the variables. Further, the result of the Vector Error Correction Model (VECM), shows a coefficient value of 0.0038 indicating the short-term adjustment speed of the system towards its long-run equilibrium. The result of Granger causality shows no bidirectional Granger causality among any of the variables. There is a Unidirectional Causality between GDPC and NRENW.
Conclusion
The study concluded that non-renewable energy can enhance economic growth in these countries, but it can aggravate the degradation of the environment. Essentially, foreign direct investment (FDI) significantly and negatively affects growth, suggesting that FDI entry into African nations negatively affects the environment.
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| ISSN: | 2709-9601 2709-961X |