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FDI (foreign direct investment) in wind energy sector in India: Testing the effectiveness of state policies using panel data

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  • Kathuria, Vinish
  • Ray, Pradeep
  • Bhangaonkar, Rekha

Abstract

This paper examines the role of state level institutional differences in attracting FDI (foreign direct investment) in wind energy in India. The role of institutional differences is measured by means of constructing a policy index using five key policies in wind energy: feed-in-tariff, open access transmission, third party sale, banking, and wheeling charges. Panel data techniques are then employed to investigate the impact of the policy differences on FDI inflow in wind energy for eight Indian states that have significant resource potential over the seven year period (2004–05 to 2010–11) after controlling for several state-specific factors. The results indicate that state-specific policy index for wind energy is significant in attracting FDI in a state irrespective of whether control variables are included or not.

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  • Kathuria, Vinish & Ray, Pradeep & Bhangaonkar, Rekha, 2015. "FDI (foreign direct investment) in wind energy sector in India: Testing the effectiveness of state policies using panel data," Energy, Elsevier, vol. 80(C), pages 190-202.
    • Handle: RePEc:eee:energy:v:80:y:2015:i:c:p:190-202
    DOI: 10.1016/j.energy.2014.11.062
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    3. Thapar, Sapan & Sharma, Seema & Verma, Ashu, 2018. "Key determinants of wind energy growth in India: Analysis of policy and non-policy factors," Energy Policy, Elsevier, vol. 122(C), pages 622-638.
    4. Panse, Riddhi & Kathuria, Vinish, 2016. "Role of policy in deployment of wind energy: evidence across states of India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 422-432.
    5. Weiwei Liu & Xiandong Xu & Zhile Yang & Jianyu Zhao & Jing Xing, 2016. "Impacts of FDI Renewable Energy Technology Spillover on China’s Energy Industry Performance," Sustainability, MDPI, vol. 8(9), pages 1-16, August.
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    8. Wira Ganet Aribowo, 2018. "Analysis of foreign direct investment as a comparison of macroeconomic factors in seven countries Asean 5, China and Japan during period 1996-2015," Journal of Economic Development, Environment and People, Alliance of Central-Eastern European Universities, vol. 7(4), pages 29-42, December.
    9. Heath Milsom, Luke & Roland, Isabelle, 2021. "Minimum wages and the China syndrome: causal evidence from US local labor markets," LSE Research Online Documents on Economics 113850, London School of Economics and Political Science, LSE Library.
    10. Biresselioglu, Mehmet Efe & Kilinc, Dilara & Onater-Isberk, Esra & Yelkenci, Tezer, 2016. "Estimating the political, economic and environmental factors’ impact on the installed wind capacity development: A system GMM approach," Renewable Energy, Elsevier, vol. 96(PA), pages 636-644.
    11. Feyyaz Zeren & Nazlıgül Gülcan & Samet Gürsoy & İbrahim Halil Ekşi & Mosab I. Tabash & Magdalena Radulescu, 2023. "The Relationship between Geothermal Energy Consumption, Foreign Direct Investment, and Economic Growth in Geothermal Consumer Countries: Evidence from Panel Fourier Causality Test," Energies, MDPI, vol. 16(3), pages 1-15, January.
    12. Vinish Kathuria, 2018. "Does Environmental Governance Matter for Foreign Direct Investment? Testing the Pollution Haven Hypothesis for Indian States," Asian Development Review, MIT Press, vol. 35(1), pages 81-107, March.

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