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Influence of renewable energy infrastructure, Chinese outward FDI, and technical efficiency on ecological sustainability in belt and road node economies

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  • Zhang, Zhuo
  • Zhao, Yongliang
  • Cai, Haiya
  • Ajaz, Tahseen

Abstract

Renewable energy infrastructure is highly interrelated to environmental sustainability and the accomplishment of sustainable development goals. A significant portion of China's outward foreign direct investment (FDI) has been allocated to energy production and transmission across the Belt and Road Initiative (BRI) region. Therefore, we examine the influence of renewable energy infrastructure, China's outward FDI, and the host country's technical efficiency on ecological sustainability. This research uses the cross-sectional autoregressive distributive lag (CS-ARDL) model to address the issues of parameter and cross-sectional heterogeneity. The findings show that renewable energy infrastructure and technical efficiency significantly reduce carbon emissions in the long run. Likewise, FDI inflows and economic growth increase emissions in the BRI region due to higher energy consumption. Moreover, the direct effect of FDI on environmental quality is negative, while the indirect impact through moderation of FDI and renewable energy infrastructure leads to lower emissions. These results implied that the reallocation of inward FDI in energy infrastructure neutralizes the negative consequences, improves energy efficiency, and resultantly lower emissions. Therefore, it opens new policy implications that we focus more on investing FDI in the energy infrastructure sector.

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  • Zhang, Zhuo & Zhao, Yongliang & Cai, Haiya & Ajaz, Tahseen, 2023. "Influence of renewable energy infrastructure, Chinese outward FDI, and technical efficiency on ecological sustainability in belt and road node economies," Renewable Energy, Elsevier, vol. 205(C), pages 608-616.
    • Handle: RePEc:eee:renene:v:205:y:2023:i:c:p:608-616
    DOI: 10.1016/j.renene.2023.01.060
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