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Boosting green energy: impact of financial development, foreign direct investment, and inflation on sustainable energy productivity in China–Pakistan economic corridor (CPEC) countries

Author

Listed:
  • Muhammad Suhrab

    (Huazhong University of Science and Technology (HUST))

  • Atta Ullah

    (Huazhong University of Science and Technology (HUST))

  • Chen Pinglu

    (Huazhong University of Science and Technology (HUST))

  • Magdalena Radulescu

    (University of Pitesti
    University Lucian Blaga of Sibiu)

Abstract

This study examined the effects of financial development (FD), foreign direct investment (FDI), and inflation (INF) on sustainable energy productivity (SEP) in the CPEC economies, based on panel data per month from January 2004 to December 2020. The autoregressive distributed lag model, correlation analysis, and dynamic ordinary least squares models were used to examine the effects of the variables. The findings proved that each factor exerts a significant impact on sustainable energy productivity. The results revealed that FDI and FD positively and significantly affected SEP, while INF had negative and critical consequences. The study also discovered that these variables have short-term and long-term impacts on SEP. The outcomes showed that financial growth in CPEC countries is vital for minimizing financial risks that could negatively impact financial market stability and SEP. Long-term financing at low rates of return, investment risks, and a lack of market players were also identified as significant obstacles to green energy projects. As a result, policymakers should consider these factors for developing more effective strategies to encourage renewable energy. Graphical abstract

Suggested Citation

  • Muhammad Suhrab & Atta Ullah & Chen Pinglu & Magdalena Radulescu, 2025. "Boosting green energy: impact of financial development, foreign direct investment, and inflation on sustainable energy productivity in China–Pakistan economic corridor (CPEC) countries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(2), pages 4659-4682, February.
    • Handle: RePEc:spr:endesu:v:27:y:2025:i:2:d:10.1007_s10668-023-04093-0
    DOI: 10.1007/s10668-023-04093-0
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