The effect of foreign direct investment and stock market growth on clean energy use across a panel of emerging market economies

Sudharshan Reddy Paramati, Mallesh Ummalla, Nicholas Apergis

    Research output: Contribution to journalArticlepeer-review

    135 Citations (Scopus)

    Abstract

    This study investigates the impact of both FDI inflows and stock market developments on clean energy use across 20 emerging market economies, spanning the period 1991-2012. It accounts for cross-sectional dependence and heterogeneity in the analysis and employs robust panel econometric techniques. The empirical results on long-run elasticities display that economic output, FDI inflows and stock market developments have all a significant positive impact on clean energy consumption. Finally, the results on heterogeneous panel non-causality tests indicate the presence of unidirectional causality running from FDI to clean energy consumption in the short-run. For robustness purposes, the paper also estimates long-run elasticities for individual countries, with the findings documenting that both FDI inflows and stock market developments have a considerable positive impact on clean energy uses. The findings urge that both policy makers and governments in these emerging market economies should initiate effective public-private-partnership investments in clean energy projects by providing lucrative incentives, which, in turn, will encourage both domestic and foreign investors to invest more in clean energy projects and, eventually, moving these economies towards sustainable economic growth.

    Original languageEnglish
    Pages (from-to)29-41
    Number of pages13
    JournalEnergy Economics
    Volume56
    Early online date11 Mar 2016
    DOIs
    Publication statusPublished - 1 May 2016

    Keywords

    • Clean energy consumption
    • Emerging market economies
    • FDI inflows
    • Stock market growth

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