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Effect of Foreign Direct Investment on Energy consumption: Does Institutional Quality matter? Evidence from Cote d Ivoire

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  • Lewis-Landry Gakpa

    (Ecole Nationale Sup rieure de Statistique et d Economie Appliqu e (ENSEA-African Centre of Excellence), Abidjan, C te d Ivoire.)

  • Hugues Kouassi Kouadio

    (Ecole Nationale Sup rieure de Statistique et d Economie Appliqu e (ENSEA-African Centre of Excellence), Abidjan, C te d Ivoire.)

Abstract

This paper examines the role played by institutional quality in the relationship between foreign direct investment and energy consumption in C te d Ivoire. Using data from the World Bank and International Country Risk Guid over the period 1984-2014 and the Dynamic Ordinary Least Squares (DOLS) and Fully Modified Ordinary Least Squares (FMOLS) methods, we account for the joint effects of institutional quality and foreign direct investment on energy consumption. The results reveal that a high level of democracy attenuates the negative effects of FDI flows on energy consumption. This result shows that improving and strengthening democratic institutions has a positive influence on energy efficiency incentive policies by changing the composition of FDI towards clean technology sectors, such as the service sector.

Suggested Citation

  • Lewis-Landry Gakpa & Hugues Kouassi Kouadio, 2022. "Effect of Foreign Direct Investment on Energy consumption: Does Institutional Quality matter? Evidence from Cote d Ivoire," International Journal of Energy Economics and Policy, Econjournals, vol. 12(1), pages 453-459.
    • Handle: RePEc:eco:journ2:2022-01-57
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    References listed on IDEAS

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    1. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    2. Barrett, Scott & Graddy, Kathryn, 2000. "Freedom, growth, and the environment," Environment and Development Economics, Cambridge University Press, vol. 5(4), pages 433-456, October.
    3. Philippe Aghion, 2005. "Growth and Institutions," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(1), pages 3-18, March.
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    Cited by:

    1. Scalamonti, Francesco, 2024. "The foreign investments-growth nexus in underdeveloped countries: the state-of-art of research analysing a selected and recent empirical literature (2020-2022)," Technological Forecasting and Social Change, Elsevier, vol. 198(C).

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    More about this item

    Keywords

    FDI; Energy Consumption; Institutional Quality; Cote d Ivoire;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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