Renewable Energy, Foreign Direct Investment and Sustainable Development: An Empirical Evidence

Narayan Parab, Ramashanti Naik, Y. V. Reddy

Abstract


Renewable energy is replenished on a human timescale. The concern for the use of renewable energy is growing across the globe due to depleting non-renewable sources and various environmental issues. We construct a model of sustainable development to demonstrate the causality and co-integration between FDI inflows and renewable energy consumption. We consider data of select 43 countries for the period 2005 to 2017 and apply panel data analysis. The results reveal a unidirectional causality from renewable energy consumption to FDI inflows and the presence of a long-run relationship. Consequently, the constructed model will assist the government, non-government organizations, and companies in evaluating the significance of renewable energy and FDI inflows in sustainable development.

Keywords: Renewable Energy, Foreign Direct Investment, Sustainable Development, Causation Effect, Co-integration

JEL Classifications: Q2, F14, F21, F23

DOI: https://doi.org/10.32479/ijeep.10206


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