IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v81y2019icp928-941.html
   My bibliography  Save this article

Energy demand–FDI nexus in Africa: Do FDIs induce dichotomous paths?

Author

Listed:
  • Adom, Philip Kofi
  • Opoku, Eric Evans Osei
  • Yan, Isabel Kit-Ming

Abstract

This study investigates the nexus between energy demand and foreign direct investment (FDI) in Africa, using the simultaneous system Generalized Method of Moments estimator and panel data that consists of 27 African countries over the period 2000–2014. Specifically, the study hypothesizes a non-linear relationship between energy demand and FDI, which imposes the assumption that conditions, such as the level of technology absorptive capacity, the level, and stage of development and adjustment cost are likely to be heterogeneous across cross-section and over time. Several empirical strategies, such as changing the structure of the model set-up, using different sample groupings and applying different estimators with different assumptions were employed to substantiate the robustness nature of the hypothesized relationship. The findings revealed a robust concave effect of FDI on energy consumption. This suggests that there are learning and imitation experiences associated with FDI, and these experiences produce dichotomous paths in terms of realizing the energy-saving benefits of FDI.

Suggested Citation

  • Adom, Philip Kofi & Opoku, Eric Evans Osei & Yan, Isabel Kit-Ming, 2019. "Energy demand–FDI nexus in Africa: Do FDIs induce dichotomous paths?," Energy Economics, Elsevier, vol. 81(C), pages 928-941.
    • Handle: RePEc:eee:eneeco:v:81:y:2019:i:c:p:928-941
    DOI: 10.1016/j.eneco.2019.05.030
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988319301847
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2019.05.030?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Faris Alshubiri & Mohamed Elheddad & Syed Ahsan Jamil & Nassima Djellouli, 2021. "The impacts of financial depth and foreign direct investment on the green and non-green energy consumption of OPEC members," SN Business & Economics, Springer, vol. 1(6), pages 1-29, June.
    2. Wang, En-Ze & Lee, Chien-Chiang, 2022. "The impact of information communication technology on energy demand: Some international evidence," International Review of Economics & Finance, Elsevier, vol. 81(C), pages 128-146.
    3. Marques, António Cardoso & Caetano, Rafaela, 2020. "The impact of foreign direct investment on emission reduction targets: Evidence from high- and middle-income countries," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 107-118.
    4. Claudia Nyarko Mensah & Lamini Dauda & Kofi Baah Boamah & Muhammad Salman, 2021. "One district one factory policy of Ghana, a transition to a low-carbon habitable economy?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(1), pages 703-721, January.
    5. Chuku, Chuku & Lang, Lin & Lim, King Yoong, 2023. "Public debt, Chinese loans and optimal exploration–extraction in Africa," Energy Economics, Elsevier, vol. 118(C).
    6. Tao Ma & Xiaoxi Cao, 2022. "FDI, technological progress, and green total factor energy productivity: evidence from 281 prefecture cities in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(9), pages 11058-11088, September.
    7. Eduardo Polloni-Silva & Guilherme Augusto Roiz & Enzo Barberio Mariano & Herick Fernando Moralles & Daisy Aparecida Nascimento Rebelatto, 2022. "The Environmental Cost of Attracting FDI: An Empirical Investigation in Brazil," Sustainability, MDPI, vol. 14(8), pages 1-14, April.
    8. Zhang, Yue & Akram, Rabia & Ren, Siyu & Rehman, Mubeen Abdur & Abbas, Shujaat, 2023. "Determinants of sustainable energy in OECD countries: Role of technology and financial resources," Resources Policy, Elsevier, vol. 87(PB).
    9. Adom, Philip Kofi & Adams, Samuel, 2020. "Decomposition of technical efficiency in agricultural production in Africa into transient and persistent technical efficiency under heterogeneous technologies," World Development, Elsevier, vol. 129(C).
    10. Opoku, Eric Evans Osei & Kufuor, Nana Kwabena & Manu, Sylvester Adasi, 2021. "Gender, electricity access, renewable energy consumption and energy efficiency," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    11. Caetano, Rafaela Vital & Marques, António Cardoso & Afonso, Tiago Lopes & Vieira, Isabel, 2023. "Could Private Investment in Energy Infrastructure soften the environmental impacts of Foreign Direct Investment? An assessment of developing countries," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 961-977.
    12. Reenu Kumari & Sunil Kumar Singh, 2024. "Impact of ICT Infrastructure, Financial Development, and Trade Openness on Economic Growth: New Evidence from Low- and High-Income Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 7069-7098, June.
    13. Opoku, Eric Evans Osei & Acheampong, Alex O. & Aluko, Olufemi Adewale, 2024. "Impact of rural-urban energy equality on environmental sustainability and the role of governance," Journal of Policy Modeling, Elsevier, vol. 46(2), pages 304-335.
    14. Shahbaz, Muhammad & Sinha, Avik & Raghutla, Chandrashekar & Vo, Xuan Vinh, 2022. "Decomposing scale and technique effects of financial development and foreign direct investment on renewable energy consumption," Energy, Elsevier, vol. 238(PB).
    15. Rafaela Vital Caetano & António Cardoso Marques & Tiago Lopes Afonso, 2024. "Can Sustainable Development Induce Foreign Direct Investment? Analysis of the Complex Inward and Outward Flows of Investment in European Union Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 9756-9783, June.
    16. Ofori, Isaac K & Gbolonyo, Emmanuel Y. & Ojong, Nathanael, 2022. "Foreign Direct Investment and Inclusive Green Growth in Africa: Energy Efficiency Contingencies and Thresholds," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 1-58.
    17. Eric Evans Osei Opoku & Kingsley E. Dogah & Nana Kwabena Kufuor & Alex O. Acheampong, 2024. "The importance of human development in combating energy poverty," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(2), pages 1189-1209, March.
    18. Xing Zhou & Quan Guo & Ming Zhang, 2021. "Impacts of OFDI on Host Country Energy Consumption and Home Country Energy Efficiency Based on a Belt and Road Perspective," Energies, MDPI, vol. 14(21), pages 1-25, November.
    19. Aluko, Olufemi Adewale & Opoku, Eric Evans Osei & Ibrahim, Muazu & Kufuor, Nana Kwabena, 2023. "Put on the light! Foreign direct investment, governance and access to electricity," Energy Economics, Elsevier, vol. 119(C).
    20. Uddin, Mirza Md Moyen & Sharif, Taimur & Islam, Abe Reza Mohammad & Abedin, Mohammad Zoynul, 2024. "Moderating impact of FDI on the growth-environment nexus in the pre-COVID-19 eras," Research in International Business and Finance, Elsevier, vol. 67(PA).
    21. Doytch, Nadia & Elheddad, Mohamed & Hammoudeh, Shawkat, 2023. "The financial Kuznets curve of energy consumption: Global evidence," Energy Policy, Elsevier, vol. 177(C).
    22. Philip Kofi Adom, 2021. "Financial depth and electricity consumption in Africa: Does education matter?," Empirical Economics, Springer, vol. 61(4), pages 1985-2039, October.
    23. Acheampong, Alex O. & Opoku, Eric Evans Osei & Dzator, Janet & Kufuor, Nana Kwabena, 2022. "Enhancing human development in developing regions: Do ICT and transport infrastructure matter?," Technological Forecasting and Social Change, Elsevier, vol. 180(C).

    More about this item

    Keywords

    Energy demand; Foreign direct investment (FDI); Generalized method of moments; Africa;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:81:y:2019:i:c:p:928-941. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.