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Energy Consumption and Inclusive Growth in Sub-Saharan Africa: Does Foreign Direct Investment Make a Difference?

Author

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  • Jinapor, John Abdulai
  • Abor, Joshua Yindenaba
  • Graham, Michael

Abstract

This paper examines the potential impact of energy consumption and foreign direct investment (FDI) on inclusive growth in 32 Sub-Saharan Africa (SSA) countries from 2000 to 2019. The results from the 2-stage system generalised method of moment (GMM), reveal that energy consumption induces inclusive growth. The results also show a substantial impact of non-renewable energy, relative to renewable energy, on inclusive growth. Additionally, the results further reveal that FDI has a non-linear relationship with inclusive growth, where FDI dampens inclusive growth to a certain point and begins to induce it after that point. Moreover, FDI effectively forms synergies with energy consumption towards promoting inclusive growth in SSA. The interactive term results revealed that FDI forms synergies with both renewable and non-renewable energy to promote inclusive growth in SSA. We recommend that African leaders focus on attracting FDIs towards financing their energy needs, particularly in the area of low-carbon or renewable energy sources, by leveraging private sector capital investments to achieve inclusive growth whilst attaining sustainable development.

Suggested Citation

  • Jinapor, John Abdulai & Abor, Joshua Yindenaba & Graham, Michael, 2024. "Energy Consumption and Inclusive Growth in Sub-Saharan Africa: Does Foreign Direct Investment Make a Difference?," MPRA Paper 121143, University Library of Munich, Germany, revised 06 Jun 2024.
    • Handle: RePEc:pra:mprapa:121143
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    More about this item

    Keywords

    SSA; Renewable Energy Consumption; Non-Renewable Energy Consumption; FDI; Inclusive Growth;
    All these keywords.

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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