Renewable energy, foreign direct investment and sustainable development: An empirical evidence

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 Foreign Direct Investment (FDI) inflows and renewable energy consumption. We consider data of select 43 countries for the period from 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.