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Energy Savings via FDI? Empirical Evidence from Developing Countries

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Author Info
Michael Hübler
Andreas Keller

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Abstract

In this paper we examine the influence of foreign direct investment inflows on energy intensities of developing countries empirically. We first show that a simple OLS estimation, as it is found in the literature, suggests energy intensity reductions from FDI inflows, which is consistent with the hypothesis of energy saving technology transfer via FDI. However, such a regression turns out to be spurious and only a starting point for further research. Therefore, we use macro level data on 60 developing countries for the period 1975-2004 including other potential determinants of energy intensities and apply panel estimation techniques and tests. The results do not confirm the hypothesis that FDI inflows reduce energy intensities of developing countries in general. Interactions of FDI with country-specific characteristics do not show significant effects, either.

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1393.

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Length: 27 pages
Date of creation: Jan 2008
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Handle: RePEc:kie:kieliw:1393

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Related research
Keywords: developing countries energy intensity FDI technology transfer

Find related papers by JEL classification:
F18 - International Economics - - Trade - - - Trade and Environment
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounting

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