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Foreign Direct Investment and Electricity Consumption on Economic Growth: Evidence from South Africa

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Abstract

This paper specifies a model in which we investigate the interrelationship of economic growth, electricity consumption and foreign direct investment. We find that foreign direct investment and electricity consumption are only cointegrated when GDP is the dependent variable. With respect to causality, the null hypothesis that electricity consumption (kWh) and foreign direct investment (FDI) do not ‘Granger cause’ GDP is rejected. Similarly, the null hypothesis that GDP and electricity consumption do not ‘Granger cause’ FDI is rejected at the same 5% level of significance. We find that electricity consumption and foreign direct investment Granger cause economic growth.

Suggested Citation

  • Dube, Smile, 2009. "Foreign Direct Investment and Electricity Consumption on Economic Growth: Evidence from South Africa," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 62(2), pages 175-200.
  • Handle: RePEc:ris:ecoint:0009
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    1. Sbia, Rashid & Shahbaz, Muhammad & Hamdi, Helmi, 2014. "A contribution of foreign direct investment, clean energy, trade openness, carbon emissions and economic growth to energy demand in UAE," Economic Modelling, Elsevier, vol. 36(C), pages 191-197.
    2. Doytch, Nadia & Narayan, Seema, 2016. "Does FDI influence renewable energy consumption? An analysis of sectoral FDI impact on renewable and non-renewable industrial energy consumption," Energy Economics, Elsevier, vol. 54(C), pages 291-301.
    3. repec:kap:iaecre:v:18:y:2012:i:2:p:139-149 is not listed on IDEAS
    4. Richard J. Cebula, 2013. "Budget Deficits, Economic Freedom, and Economic Growth in OECD Nations: P2SLS Fixed-Effects Estimates, 2003–2008," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 28(Spring 20), pages 75-96.
    5. Richard Cebula & Franklin Mixon, 2012. "The Impact of Fiscal and Other Economic Freedoms on Economic Growth: An Empirical Analysis," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 18(2), pages 139-149, May.
    6. Richard Cebula & J. Clark, 2012. "Lessons from the experience of OECD nations on macroeconomic growth and economic freedom, 2004–2008," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 59(3), pages 231-243, September.
    7. Richard J. Cebula & Franklin G. Mixon Jr., 2014. "The Roles of Economic Freedom and Regulatory Quality in Creating a Favorable Environment for Investment in Energy R&D, Infrastructure, and Capacity," American Journal of Economics and Sociology, Wiley Blackwell, vol. 73(2), pages 299-324, April.
    8. Azam, Muhammad & Khan, Abdul Qayyum & Zaman, Khalid & Ahmad, Mehboob, 2015. "Factors determining energy consumption: Evidence from Indonesia, Malaysia and Thailand," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 1123-1131.

    More about this item

    Keywords

    ARLD; Toda and Yamamoto Granger Non-causality; South Africa; Augmented VAR;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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