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How various energy sources affect industrial investment? Empirical evidence from Asian economies

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  • Farooq, Umar
  • Ahmed, Jaleel
  • Shahbaz, Muhammad

Abstract

Due to the surge in global warming and economic competition, the governments of nearly all the countries of the world are struggling to maximize the deployment of such energy sources that emit less carbon and are cost-effective. Additionally, the utilization of cost-effective energy options induces industrial growth by supplying low-cost fuel to industrial sector. Therefore, this study seeks to assess the dynamic role of multiple energy sources in protecting industrial investment. For empirical analysis, we consider the 10-year firm-specific data of 11 Asian economies and employ panel EGLS and 2-step system GMM models for empirical estimations. The statistical outputs illustrate the positive and significant effect of three energy sources i.e. renewable, nuclear, and hydroelectric while the negative impact of non-renewable energy sources on corporate investment choices. The statistical analysis further guides on how this effect changes across countries that are not producing electricity from nuclear and hydroelectric sources. The empirical analysis was also robust across different industrial sectors. Our analysis provides multiple policy implications regarding energy transformation from non-renewable to other sources of energy and boosting the production of electricity from economical sources of energy. It further highlights the growth-promising role of specific sources of energy in expanding industrial investment.

Suggested Citation

  • Farooq, Umar & Ahmed, Jaleel & Shahbaz, Muhammad, 2022. "How various energy sources affect industrial investment? Empirical evidence from Asian economies," Energy, Elsevier, vol. 248(C).
    • Handle: RePEc:eee:energy:v:248:y:2022:i:c:s036054422200439x
    DOI: 10.1016/j.energy.2022.123536
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    More about this item

    Keywords

    Renewable energy sources; Non-renewable energy sources; Nuclear energy sources; Hydroelectric energy sources; Industrial investment;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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