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Impact of Foreign Direct Investment on Energy Consumption: Empirical Evidence

Author

Listed:
  • Sima Rani Dey

    (Bangladesh Institute of Governance and Management, Bangladesh)

  • Monirul Islam

    (Bangladesh Institute of Governance and Management, Bangladesh and Ural Federal University, Russian Federation)

Abstract

The paper investigates the association between foreign direct investment (FDI) and energy consumption within the purview of trade liberalization and economic growth from 1971 to 2014 in Bangladesh, employing the autoregressive distributed lag (ARDL) bounds testing approach. The study results depict a negative impact of FDI on energy consumption in both the long and short run. Moreover, the study results remain robust across alternative measurements and estimators. Furthermore, a unidirectional causal relationship moving from energy consumption to foreign direct investment supports the institutional strength of the energy sector. Therefore, policymakers should undertake pragmatic policies for the best utilization of FDI in the energy sector and reinforce local firms’ absorptive capability to internalize FDI-centric information spillovers in energy conservation.

Suggested Citation

  • Sima Rani Dey & Monirul Islam, 2023. "Impact of Foreign Direct Investment on Energy Consumption: Empirical Evidence," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 21(1 (Spring), pages 41-69.
    • Handle: RePEc:mgt:youmgt:v:21:y:2023:i:1:p:41-69
    DOI: 10.26493/1854-6935.21.41-69
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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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