Does Foreign Direct Investment Influence Renewable Energy Consumption? Empirical Evidence from South Asian Countries

In selected South Asian countries, the study intends to investigate the relationship between urban population (UP), carbon dioxide (CO<sub>2</sub>), trade openness (TO), gross domestic product (GDP), foreign direct investment (FDI), and renewable energy (RE). Fully modified ordinary leas...

Full description

Bibliographic Details
Main Authors: Xueqing Kang, Farman Ullah Khan, Raza Ullah, Muhammad Arif, Shams Ur Rehman, Farid Ullah
Format: Article
Language:English
Published: MDPI AG 2021-06-01
Series:Energies
Subjects:
Online Access:https://www.mdpi.com/1996-1073/14/12/3470
_version_ 1797530472181399552
author Xueqing Kang
Farman Ullah Khan
Raza Ullah
Muhammad Arif
Shams Ur Rehman
Farid Ullah
author_facet Xueqing Kang
Farman Ullah Khan
Raza Ullah
Muhammad Arif
Shams Ur Rehman
Farid Ullah
author_sort Xueqing Kang
collection DOAJ
description In selected South Asian countries, the study intends to investigate the relationship between urban population (UP), carbon dioxide (CO<sub>2</sub>), trade openness (TO), gross domestic product (GDP), foreign direct investment (FDI), and renewable energy (RE). Fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) models for estimation were used in the study, which covered yearly data from 1990 to 2019. We used Levin–Lin–Chu, Im–Pesaran–Shin, and Fisher PP tests for the stationarity of the variables. The outcomes of the panel cointegration approach looked at whether there was a long-run equilibrium nexus between selected variables in Pakistan, Bangladesh, India, and Sri Lanka. The FMOLS approach was also used to assess the relationship, and the results suggest that there is a significant and negative nexus between FDI and renewable energy in south Asian nations. The study’s findings reveal a strong and favorable relationship between GDP and renewable energy use. In South Asian nations (Sri Lanka, Pakistan, India, and Bangladesh), the FMOLS and DOLS findings are nearly identical, but the authors used the DOLS model for robustification. According to the findings, policymakers in South Asian economies (Sri Lanka, Pakistan, India, and Bangladesh) should view GDP and FDI as fundamental policy instruments for environmental sustainability. To reduce reliance on hazardous energy sources, the government should also reassure financial sectors to participate in renewable energy.
first_indexed 2024-03-10T10:29:29Z
format Article
id doaj.art-9e553dc6d0454489bbca6e6f0b7d6680
institution Directory Open Access Journal
issn 1996-1073
language English
last_indexed 2024-03-10T10:29:29Z
publishDate 2021-06-01
publisher MDPI AG
record_format Article
series Energies
spelling doaj.art-9e553dc6d0454489bbca6e6f0b7d66802023-11-21T23:45:16ZengMDPI AGEnergies1996-10732021-06-011412347010.3390/en14123470Does Foreign Direct Investment Influence Renewable Energy Consumption? Empirical Evidence from South Asian CountriesXueqing Kang0Farman Ullah Khan1Raza Ullah2Muhammad Arif3Shams Ur Rehman4Farid Ullah5Department of Financial Engineering, School of Economics, Sichuan University, No. 24, South Section 1, Yihuan Road, Chengdu 610065, ChinaDepartment of Management Sciences, COMSATS University Islamabad, Islamabad 45550, PakistanDepartment of Management Sciences, Islamia College University, Peshawar 25120, PakistanDepartment of Management Sciences, University of Swabi, Swabi 23430, PakistanDepartment of Management Science, Institute of Business and Management Sciences (IBMS), University of Agriculture, Peshawar 21530, PakistanDepartment of Financial Engineering, School of Economics, Sichuan University, No. 24, South Section 1, Yihuan Road, Chengdu 610065, ChinaIn selected South Asian countries, the study intends to investigate the relationship between urban population (UP), carbon dioxide (CO<sub>2</sub>), trade openness (TO), gross domestic product (GDP), foreign direct investment (FDI), and renewable energy (RE). Fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) models for estimation were used in the study, which covered yearly data from 1990 to 2019. We used Levin–Lin–Chu, Im–Pesaran–Shin, and Fisher PP tests for the stationarity of the variables. The outcomes of the panel cointegration approach looked at whether there was a long-run equilibrium nexus between selected variables in Pakistan, Bangladesh, India, and Sri Lanka. The FMOLS approach was also used to assess the relationship, and the results suggest that there is a significant and negative nexus between FDI and renewable energy in south Asian nations. The study’s findings reveal a strong and favorable relationship between GDP and renewable energy use. In South Asian nations (Sri Lanka, Pakistan, India, and Bangladesh), the FMOLS and DOLS findings are nearly identical, but the authors used the DOLS model for robustification. According to the findings, policymakers in South Asian economies (Sri Lanka, Pakistan, India, and Bangladesh) should view GDP and FDI as fundamental policy instruments for environmental sustainability. To reduce reliance on hazardous energy sources, the government should also reassure financial sectors to participate in renewable energy.https://www.mdpi.com/1996-1073/14/12/3470renewable energytrade opennessFDIgross domestic product
spellingShingle Xueqing Kang
Farman Ullah Khan
Raza Ullah
Muhammad Arif
Shams Ur Rehman
Farid Ullah
Does Foreign Direct Investment Influence Renewable Energy Consumption? Empirical Evidence from South Asian Countries
Energies
renewable energy
trade openness
FDI
gross domestic product
title Does Foreign Direct Investment Influence Renewable Energy Consumption? Empirical Evidence from South Asian Countries
title_full Does Foreign Direct Investment Influence Renewable Energy Consumption? Empirical Evidence from South Asian Countries
title_fullStr Does Foreign Direct Investment Influence Renewable Energy Consumption? Empirical Evidence from South Asian Countries
title_full_unstemmed Does Foreign Direct Investment Influence Renewable Energy Consumption? Empirical Evidence from South Asian Countries
title_short Does Foreign Direct Investment Influence Renewable Energy Consumption? Empirical Evidence from South Asian Countries
title_sort does foreign direct investment influence renewable energy consumption empirical evidence from south asian countries
topic renewable energy
trade openness
FDI
gross domestic product
url https://www.mdpi.com/1996-1073/14/12/3470
work_keys_str_mv AT xueqingkang doesforeigndirectinvestmentinfluencerenewableenergyconsumptionempiricalevidencefromsouthasiancountries
AT farmanullahkhan doesforeigndirectinvestmentinfluencerenewableenergyconsumptionempiricalevidencefromsouthasiancountries
AT razaullah doesforeigndirectinvestmentinfluencerenewableenergyconsumptionempiricalevidencefromsouthasiancountries
AT muhammadarif doesforeigndirectinvestmentinfluencerenewableenergyconsumptionempiricalevidencefromsouthasiancountries
AT shamsurrehman doesforeigndirectinvestmentinfluencerenewableenergyconsumptionempiricalevidencefromsouthasiancountries
AT faridullah doesforeigndirectinvestmentinfluencerenewableenergyconsumptionempiricalevidencefromsouthasiancountries