Energy Savings via FDI? Empirical Evidence from Developing Countries
AbstractIn 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1393.
Length: 27 pages
Date of creation: Jan 2008
Date of revision:
developing countries; energy intensity; FDI; technology transfer;
Other versions of this item:
- Hübler, Michael & Keller, Andreas, 2010. "Energy savings via FDI? Empirical evidence from developing countries," Environment and Development Economics, Cambridge University Press, vol. 15(01), pages 59-80, February.
- 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; Research and Development; Intellectual Property Rights - - - 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 Accounts and Accounting; Environmental Equity; Population Growth
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-26 (All new papers)
- NEP-DEV-2008-01-26 (Development)
- NEP-ENE-2008-01-26 (Energy Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 1998.
"Is Free Trade Good for the Environment?,"
NBER Working Papers
6707, National Bureau of Economic Research, Inc.
- Cole, Matthew A., 2006. "Does trade liberalization increase national energy use?," Economics Letters, Elsevier, vol. 92(1), pages 108-112, July.
- Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I.
- Mielnik, Otavio & Goldemberg, Jose, 2002. "Foreign direct investment and decoupling between energy and gross domestic product in developing countries," Energy Policy, Elsevier, vol. 30(2), pages 87-89, January.
- Eskeland, Gunnar S. & Harrison, Ann E., 1997.
"Moving to greener pastures : multinationals and the pollution-haven hypothesis,"
Policy Research Working Paper Series
1744, The World Bank.
- Eskeland, Gunnar S. & Harrison, Ann E., 2003. "Moving to greener pastures? Multinationals and the pollution haven hypothesis," Journal of Development Economics, Elsevier, vol. 70(1), pages 1-23, February.
- Gunnar A. Eskeland & Ann E. Harrison, 2002. "Moving to Greener Pastures? Multinationals and the Pollution Haven Hypothesis," NBER Working Papers 8888, National Bureau of Economic Research, Inc.
- Stern, David I., 2004.
"The Rise and Fall of the Environmental Kuznets Curve,"
Elsevier, vol. 32(8), pages 1419-1439, August.
- David I. Stern, 2003. "The Rise and Fall of the Environmental Kuznets Curve," Rensselaer Working Papers in Economics 0302, Rensselaer Polytechnic Institute, Department of Economics.
- Perman, Roger & Stern, David I., 2003.
"Evidence from panel unit root and cointegration tests that the Environmental Kuznets Curve does not exist,"
Australian Journal of Agricultural and Resource Economics,
Australian Agricultural and Resource Economics Society, vol. 47(3), September.
- Roger Perman & David I. Stern, 2003. "Evidence from panel unit root and cointegration tests that the Environmental Kuznets Curve does not exist," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(3), pages 325-347, 09.
- G. Corcos & M. Del Gatto & G. Mion & GIP. Ottaviano, 2007.
"Productivity and Firm Selection: Intra- vs International Trade,"
Working Paper CRENoS
200706, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
- CORCOS, Gregory & DEL GATTO, Massimo & MION, Giordano & OTTAVIANO, Gianmarco I.P., 2007. "Productivity and firm selection: intra- vs international trade," CORE Discussion Papers 2007060, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Kamal Saggi, 2002.
"Trade, Foreign Direct Investment, and International Technology Transfer: A Survey,"
World Bank Research Observer,
World Bank Group, vol. 17(2), pages 191-235, September.
- Saggi, Kamal, 2000. "Trade, foreign direct investment, and international technology transfer : a survey," Policy Research Working Paper Series 2349, The World Bank.
- Rossana Galli, 1998. "The Relationship Between Energy Intensity and Income Levels: Forecasting Long Term Energy Demand in Asian Emerging Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 85-105.
- Pasaran, M.H. & Im, K.S. & Shin, Y., 1995.
"Testing for Unit Roots in Heterogeneous Panels,"
Cambridge Working Papers in Economics
9526, Faculty of Economics, University of Cambridge.
- Szroeter, Jerzy, 1978. "A Class of Parametric Tests for Heteroscedasticity in Linear Econometric Models X1-ab," Econometrica, Econometric Society, vol. 46(6), pages 1311-27, November.
- Manuel R. AGOSIN & Ricardo MAYER, 2000.
"Foreign Investment In Developing Countries, Does It Crowd In Domestic Investment?,"
UNCTAD Discussion Papers
146, United Nations Conference on Trade and Development.
- Manuel Agosin & Roberto Machado, 2005. "Foreign Investment in Developing Countries: Does it Crowd in Domestic Investment?," Oxford Development Studies, Taylor and Francis Journals, vol. 33(2), pages 149-162.
- David M. Drukker, 2003. "Testing for serial correlation in linear panel-data models," Stata Journal, StataCorp LP, vol. 3(2), pages 168-177, June.
- Choi, In, 2001. "Unit root tests for panel data," Journal of International Money and Finance, Elsevier, vol. 20(2), pages 249-272, April.
- Massimiliano Mazzanti & Antonio Musolesi & Roberto Zoboli, 2006. "A Bayesian Approach to the Estimation of Environmental Kuznets Curves for CO2 Emissions," Working Papers 2006.121, Fondazione Eni Enrico Mattei.
- Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002.
"Unit root tests in panel data: asymptotic and finite-sample properties,"
Journal of Econometrics,
Elsevier, vol. 108(1), pages 1-24, May.
- Tom Doan, . "LEVINLIN: RATS procedure to perform Levin-Lin-Chu test for unit roots in panel data," Statistical Software Components RTS00242, Boston College Department of Economics.
- Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
- Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
- White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
- Fisher-Vanden, Karen & Jefferson, Gary H. & Liu, Hongmei & Tao, Quan, 2004. "What is driving China's decline in energy intensity?," Resource and Energy Economics, Elsevier, vol. 26(1), pages 77-97, March.
- Angelo Antoci & Paolo Russu & Elisa Ticci, 2013.
"Investment inflows and sustainable development in a natural resource-dependent economy,"
Department of Economics University of Siena
670, Department of Economics, University of Siena.
- Angelo Antoci & Paolo Russu & Elisa Ticci, 2011. "Investement inflows and sustainable development in a natural resource-dependent economy," Department of Economic Policy, Finance and Development (DEPFID) University of Siena 0311, Department of Economic Policy, Finance and Development (DEPFID), University of Siena.
- Pueyo, Ana & García, Rodrigo & Mendiluce, María & Morales, Darío, 2011. "The role of technology transfer for the development of a local wind component industry in Chile," Energy Policy, Elsevier, vol. 39(7), pages 4274-4283, July.
- Cerdeira Bento, João Paulo, 2012. "Cointegration Models Applied For Portugal’s Energy Consumption, Inward FDI and GDP Series (1980-2007)," MPRA Paper 41619, University Library of Munich, Germany.
- Bento Cerdeira, João Paulo, 2012. "The role of foreign direct investment in the renewable electricity generation and economic growth nexus in Portugal: a cointegration and causality analysis," MPRA Paper 41533, University Library of Munich, Germany.
- Bettina Kretschmer & Michael Hübler & Peter Nunnenkamp, 2010. "Does Foreign Aid Reduce Energy and Carbon Intensities in Developing Countries," Kiel Working Papers 1598, Kiel Institute for the World Economy.
- Hübler, Michael & Glas, Alexander, 2013. "The energy-bias of North-South technology spillovers: A global, bilateral, bisectoral trade analysis," ZEW Discussion Papers 13-031, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Michael Hübler, 2009. "Energy Saving Technology Diffusion via FDI and Trade: A CGE Model of China," Kiel Working Papers 1479, Kiel Institute for the World Economy.
- João Paulo Bento, 2011. "Energy Savings via Foreign Direct Investment? - Empirical evidence from Portugal," Working Papers 2011/24, Maastricht School of Management.
- Hübler, Michael, 2011. "Technology diffusion under contraction and convergence: A CGE analysis of China," Energy Economics, Elsevier, vol. 33(1), pages 131-142, January.
- Richard Perkins & Eric Neumayer, 2012. "Do recipient country characteristics affect international spillovers of CO 2-efficiency via trade and foreign direct investment?," Climatic Change, Springer, vol. 112(2), pages 469-491, May.
- Hamdi, Helmi & Sbia, Rashid & Shahbaz, Muhammad, 2013. "The Nexus between Electricity Consumption and Economic Growth in Bahrain," MPRA Paper 48472, University Library of Munich, Germany, revised 19 Jul 2013.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dieter Stribny).
If references are entirely missing, you can add them using this form.