IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v123y2018icp337-348.html
   My bibliography  Save this article

Relative significance of determinants of foreign direct investment in wind and solar energy in developing countries – AHP analysis

Author

Listed:
  • Keeley, Alexander Ryota
  • Matsumoto, Ken’ichi

Abstract

The importance of foreign direct investment (FDI) for the development of renewable energy in developing countries has been increasingly recognized. Numerous countries have created various measures to attract FDI in the renewable energy sector. This paper uses the analytical hierarch process to clarify the relative significance of the determinants in the location decisions of foreign wind and solar energy investors. A total of 18 determinants that are categorized into the macroeconomic environment, institutional environment, natural conditions, and renewable energy policy categories are used for the analysis. The results show that adding to the traditional determinants of FDI, including the macroeconomic environment, the institutional environment, and natural conditions, renewable energy support policies have the same or stronger influence as location determinants of FDI. The paper also points out that some of the traditional determinants, such as exchange rate volatility, access to land, and an efficient and transparent administrative procedure, are also very important as determinants of FDI in wind and solar energy. Policy implications focus on the determinants of FDI in wind and solar energy. The relative significance of the determinants clarified through this study offers criteria for prioritizing policies and actions for policy makers.

Suggested Citation

  • Keeley, Alexander Ryota & Matsumoto, Ken’ichi, 2018. "Relative significance of determinants of foreign direct investment in wind and solar energy in developing countries – AHP analysis," Energy Policy, Elsevier, vol. 123(C), pages 337-348.
    • Handle: RePEc:eee:enepol:v:123:y:2018:i:c:p:337-348
    DOI: 10.1016/j.enpol.2018.08.055
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421518305858
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2018.08.055?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kreiss, Jan & Ehrhart, Karl-Martin & Haufe, Marie-Christin, 2017. "Appropriate design of auctions for renewable energy support – Prequalifications and penalties," Energy Policy, Elsevier, vol. 101(C), pages 512-520.
    2. Abdmouleh, Zeineb & Alammari, Rashid A.M. & Gastli, Adel, 2015. "Review of policies encouraging renewable energy integration & best practices," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 249-262.
    3. Nikolaev, Angel & Konidari, Popi, 2017. "Development and assessment of renewable energy policy scenarios by 2030 for Bulgaria," Renewable Energy, Elsevier, vol. 111(C), pages 792-802.
    4. Maulud, A.L. & Saidi, H., 2012. "The Malaysian Fifth Fuel Policy: Re-strategising the Malaysian Renewable Energy Initiatives," Energy Policy, Elsevier, vol. 48(C), pages 88-92.
    5. Kaya, Tolga & Kahraman, Cengiz, 2010. "Multicriteria renewable energy planning using an integrated fuzzy VIKOR & AHP methodology: The case of Istanbul," Energy, Elsevier, vol. 35(6), pages 2517-2527.
    6. Grace Lee & Edwin Chan, 2008. "The Analytic Hierarchy Process (AHP) Approach for Assessment of Urban Renewal Proposals," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 89(1), pages 155-168, October.
    7. Nigim, K. & Munier, N. & Green, J., 2004. "Pre-feasibility MCDM tools to aid communities in prioritizing local viable renewable energy sources," Renewable Energy, Elsevier, vol. 29(11), pages 1775-1791.
    8. Painuly, J.P, 2001. "Barriers to renewable energy penetration; a framework for analysis," Renewable Energy, Elsevier, vol. 24(1), pages 73-89.
    9. Kozo Kiyota & Shujiro Urata, 2004. "Exchange Rate, Exchange Rate Volatility and Foreign Direct Investment," The World Economy, Wiley Blackwell, vol. 27(10), pages 1501-1536, November.
    10. Sebastian Edwards, 1990. "Capital Flows, Foreign Direct Investment, and Debt-Equity Swaps in Developing Countries," NBER Working Papers 3497, National Bureau of Economic Research, Inc.
    11. Kambezidis, Harry D. & Kasselouri, Barbara & Konidari, Popi, 2011. "Evaluating policy options for increasing the RES-E penetration in Greece," Energy Policy, Elsevier, vol. 39(9), pages 5388-5398, September.
    12. Gatzert, Nadine & Vogl, Nikolai, 2016. "Evaluating investments in renewable energy under policy risks," Energy Policy, Elsevier, vol. 95(C), pages 238-252.
    13. Eyraud, Luc & Clements, Benedict & Wane, Abdoul, 2013. "Green investment: Trends and determinants," Energy Policy, Elsevier, vol. 60(C), pages 852-865.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yuanfeng Hu & Yixiang Tian & Luping Zhang, 2023. "Green Bond Pricing and Optimization Based on Carbon Emission Trading and Subsidies: From the Perspective of Externalities," Sustainability, MDPI, vol. 15(10), pages 1-20, May.
    2. Shinwari, Riazullah & Yangjie, Wang & Payab, Ahmad Haseeb & Kubiczek, Jakub & Dördüncü, Hazar, 2022. "What drives investment in renewable energy resources? Evaluating the role of natural resources volatility and economic performance for China," Resources Policy, Elsevier, vol. 77(C).
    3. Wiesława Lizinska & Roman Kisiel & Alina Zrobek-Rozanska, 2020. "Foreign Direct Investment in Poland and Changes in the Branch Structure," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 201-214.
    4. Masako Numata & Masahiro Sugiyama & Gento Mogi, 2020. "Barrier Analysis for the Deployment of Renewable-Based Mini-Grids in Myanmar Using the Analytic Hierarchy Process (AHP)," Energies, MDPI, vol. 13(6), pages 1-16, March.
    5. Pick-Soon Ling & Ming K. Lim & Ming-Lang Tseng, 2020. "Assessing Sustainable Foreign Direct Investment Performance in Malaysia: A Comparison on Policy Makers and Investor Perceptions," Sustainability, MDPI, vol. 12(20), pages 1-38, October.
    6. Tolliver, Clarence & Keeley, Alexander Ryota & Managi, Shunsuke, 2020. "Policy targets behind green bonds for renewable energy: Do climate commitments matter?," Technological Forecasting and Social Change, Elsevier, vol. 157(C).
    7. Corrêa, Kleber Costa & Uriona-Maldonado, Mauricio & Vaz, Caroline Rodrigues, 2022. "The evolution, consolidation and future challenges of wind energy in Uruguay," Energy Policy, Elsevier, vol. 161(C).
    8. Aikaterini Papapostolou & Charikleia Karakosta & Georgios Apostolidis & Haris Doukas, 2020. "An AHP-SWOT-Fuzzy TOPSIS Approach for Achieving a Cross-Border RES Cooperation," Sustainability, MDPI, vol. 12(7), pages 1-28, April.
    9. Ridoan Karim & Firdaus Muhammad-Sukki & Mina Hemmati & Md Shah Newaz & Haroon Farooq & Mohd Nabil Muhtazaruddin & Muhammad Zulkipli & Jorge Alfredo Ardila-Rey, 2020. "Paving towards Strategic Investment Decision: A SWOT Analysis of Renewable Energy in Bangladesh," Sustainability, MDPI, vol. 12(24), pages 1-30, December.
    10. Fanta Barry & Marie Sawadogo & Maïmouna Bologo (Traoré) & Igor W. K. Ouédraogo & Thomas Dogot, 2021. "Key Barriers to the Adoption of Biomass Gasification in Burkina Faso," Sustainability, MDPI, vol. 13(13), pages 1-14, June.
    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. Tiantian Zhang & Ken’ichi Matsumoto & Kei Nakagawa, 2021. "The Relative Importance of Determinants of the Solar Photovoltaic Industry in China: Analyses by the Diamond Model and the Analytic Hierarchy Process," Energies, MDPI, vol. 14(20), pages 1-20, October.
    13. BumChoong Kim & Juhan Kim & Jinsoo Kim, 2019. "Evaluation Model for Investment in Solar Photovoltaic Power Generation Using Fuzzy Analytic Hierarchy Process," Sustainability, MDPI, vol. 11(10), pages 1-23, May.
    14. Mrówczyńska, M. & Skiba, M. & Sztubecka, M. & Bazan-Krzywoszańska, A. & Kazak, J.K. & Gajownik, P., 2021. "Scenarios as a tool supporting decisions in urban energy policy: The analysis using fuzzy logic, multi-criteria analysis and GIS tools," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. BumChoong Kim & Juhan Kim & Jinsoo Kim, 2019. "Evaluation Model for Investment in Solar Photovoltaic Power Generation Using Fuzzy Analytic Hierarchy Process," Sustainability, MDPI, vol. 11(10), pages 1-23, May.
    2. Ilbahar, Esra & Kahraman, Cengiz & Cebi, Selcuk, 2022. "Risk assessment of renewable energy investments: A modified failure mode and effect analysis based on prospect theory and intuitionistic fuzzy AHP," Energy, Elsevier, vol. 239(PA).
    3. Alkan, Ömer & Albayrak, Özlem Karadağ, 2020. "Ranking of renewable energy sources for regions in Turkey by fuzzy entropy based fuzzy COPRAS and fuzzy MULTIMOORA," Renewable Energy, Elsevier, vol. 162(C), pages 712-726.
    4. Punia Sindhu, Sonal & Nehra, Vijay & Luthra, Sunil, 2016. "Recognition and prioritization of challenges in growth of solar energy using analytical hierarchy process: Indian outlook," Energy, Elsevier, vol. 100(C), pages 332-348.
    5. Pei-Hsuan Tsai & Chih-Jou Chen & Ho-Chin Yang, 2021. "Using Porter’s Diamond Model to Assess the Competitiveness of Taiwan’s Solar Photovoltaic Industry," SAGE Open, , vol. 11(1), pages 21582440209, January.
    6. Lim, Xin-Le & Lam, Wei-Haur, 2014. "Public Acceptance of Marine Renewable Energy in Malaysia," Energy Policy, Elsevier, vol. 65(C), pages 16-26.
    7. Büyüközkan, Gülçin & Güleryüz, Sezin, 2016. "An integrated DEMATEL-ANP approach for renewable energy resources selection in Turkey," International Journal of Production Economics, Elsevier, vol. 182(C), pages 435-448.
    8. Matthäus, David, 2020. "Designing effective auctions for renewable energy support," Energy Policy, Elsevier, vol. 142(C).
    9. Izzet Alp Gul & Gülgün Kayakutlu & M. Özgür Kayalica, 2020. "Risk Analysis in Renewable Energy System (RES) Investment for a Developing Country: A Case Study in Pakistan," Arthaniti: Journal of Economic Theory and Practice, , vol. 19(2), pages 204-223, December.
    10. Athanasios Kolios & Varvara Mytilinou & Estivaliz Lozano-Minguez & Konstantinos Salonitis, 2016. "A Comparative Study of Multiple-Criteria Decision-Making Methods under Stochastic Inputs," Energies, MDPI, vol. 9(7), pages 1-21, July.
    11. Ozorhon, Beliz & Batmaz, Arda & Caglayan, Semih, 2018. "Generating a framework to facilitate decision making in renewable energy investments," Renewable and Sustainable Energy Reviews, Elsevier, vol. 95(C), pages 217-226.
    12. Çolak, Murat & Kaya, İhsan, 2017. "Prioritization of renewable energy alternatives by using an integrated fuzzy MCDM model: A real case application for Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 840-853.
    13. Abba, Z.Y.I. & Balta-Ozkan, N. & Hart, P., 2022. "A holistic risk management framework for renewable energy investments," Renewable and Sustainable Energy Reviews, Elsevier, vol. 160(C).
    14. Angelopoulos, Dimitrios & Doukas, Haris & Psarras, John & Stamtsis, Giorgos, 2017. "Risk-based analysis and policy implications for renewable energy investments in Greece," Energy Policy, Elsevier, vol. 105(C), pages 512-523.
    15. Polzin, Friedemann & Egli, Florian & Steffen, Bjarne & Schmidt, Tobias S., 2019. "How do policies mobilize private finance for renewable energy?—A systematic review with an investor perspective," Applied Energy, Elsevier, vol. 236(C), pages 1249-1268.
    16. Strantzali, Eleni & Aravossis, Konstantinos, 2016. "Decision making in renewable energy investments: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 885-898.
    17. Ridoan Karim & Firdaus Muhammad-Sukki & Mina Hemmati & Md Shah Newaz & Haroon Farooq & Mohd Nabil Muhtazaruddin & Muhammad Zulkipli & Jorge Alfredo Ardila-Rey, 2020. "Paving towards Strategic Investment Decision: A SWOT Analysis of Renewable Energy in Bangladesh," Sustainability, MDPI, vol. 12(24), pages 1-30, December.
    18. Rodrigo A. Estévez & Valeria Espinoza & Roberto D. Ponce Oliva & Felipe Vásquez-Lavín & Stefan Gelcich, 2021. "Multi-Criteria Decision Analysis for Renewable Energies: Research Trends, Gaps and the Challenge of Improving Participation," Sustainability, MDPI, vol. 13(6), pages 1-13, March.
    19. Jamal, Taskin & Urmee, Tania & Shafiullah, G.M., 2020. "Planning of off-grid power supply systems in remote areas using multi-criteria decision analysis," Energy, Elsevier, vol. 201(C).
    20. Egli, Florian, 2020. "Renewable energy investment risk: An investigation of changes over time and the underlying drivers," Energy Policy, Elsevier, vol. 140(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:123:y:2018:i:c:p:337-348. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.