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Relationship between Energy Consumption, Foreign Direct Investment, and Labor Force Participation Using the VECM Model: Empirical Study in OECD Countries

Author

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  • Heru Wahyudi

    (Economic Development, University of Lampung, Bandar Lampung, Indonesia.)

  • Widia Anggi Palupi

    (Economic Development, University of Lampung, Bandar Lampung, Indonesia.)

Abstract

The purpose of this study is to determine the causal relationship as well as the long-term and short-term relationship between total energy consumption, foreign direct investment (FDI), and labor force participation rates in OECD countries from 1994 to 2019 using Granger Causality Test and Vector Error Correction Model (VCEM). In this study, it is found that energy consumption and FDI have a two-way causality, energy consumption and the labor force participation rate have a two-way causality and FDI and the labor force participation rate have a two-way causality. In the long term, FDI has a significant positive effect on energy consumption while labor force participation has an insignificant negative effect on energy consumption. Meanwhile, in the short term, FDI and labor force participation rates have no effect. This research contributes to decision-making in the field of energy, FDI, and improving the quality and quantity of the workforce in OECD countries.

Suggested Citation

  • Heru Wahyudi & Widia Anggi Palupi, 2023. "Relationship between Energy Consumption, Foreign Direct Investment, and Labor Force Participation Using the VECM Model: Empirical Study in OECD Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 13(2), pages 157-165, March.
    • Handle: RePEc:eco:journ2:2023-02-16
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    References listed on IDEAS

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    3. Magdalena Ziolo & Sandra Jednak & Gordana Savić & Dragana Kragulj, 2020. "Link between Energy Efficiency and Sustainable Economic and Financial Development in OECD Countries," Energies, MDPI, vol. 13(22), pages 1-28, November.
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    5. Shaolong Zeng & Yiqun Liu & Junjie Ding & Danlu Xu, 2020. "An Empirical Analysis of Energy Consumption, FDI and High Quality Development Based on Time Series Data of Zhejiang Province," IJERPH, MDPI, vol. 17(9), pages 1-17, May.
    6. Orsetta Causa & Nhung Luu & Michael Abendschein, 2021. "Labour market transitions across OECD countries: Stylised facts," OECD Economics Department Working Papers 1692, OECD Publishing.
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    Cited by:

    1. Kolawole Ibrahim Gbolahan, 2023. "An Empirical Investigation of Bitcoin Hedging Capabilities against Inflation using VECM: The Case of United States, Eurozone, Philippines, Ukraine, Canada, India, and Nigeria," International Journal of Economics and Financial Issues, Econjournals, vol. 13(6), pages 91-100, November.
    2. Aina B. Aidarova & Gulshat Abdimutalipovna Zhadigerova & Ainur Abilkassym & Lyailya Abdybayevna Baibulekova & Dina B. Balabekova & Saule A. Ilasheva, 2023. "Analysis of the Relationship between Energy Consumption, Foreign Direct Investment, and Labor Force Participation by Vector Error Correction Model: The Case of Kazakhstan," International Journal of Energy Economics and Policy, Econjournals, vol. 13(5), pages 108-114, September.
    3. Toto Gunarto & Ukhti Ciptawaty & Dedy Yuliawan & Ahmad Mahyudin & Ahmad Dhea Pratama & Heru Wahyudi, 2024. "Comparison of Energy Consumption to Economic Growth in Developing Asian and Developed Asian Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 14(1), pages 264-271, January.

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    More about this item

    Keywords

    Granger Causality; VECM; Energy; FDI; OECD;
    All these keywords.

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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