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The nexus among foreign direct investment in renewable electricity industry, renewable electricity production, and economic growth in Africa

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  • Ahmed Rashed
  • Chen-Chen Yong
  • Siew-Voon Soon

Abstract

Africa is still struggling to mitigate its electricity insecurity issues. This situation renders foreign direct investment in the renewable electricity industry (FDIREI) and renewable electricity production (REP) to become simultaneously important to Africa. Using a novel dataset of FDIREI, this paper examines the existence and nature of cointegration and causality nexuses among FDIREI, REP, and economic growth (GDP) in 32 African countries over 2003–2019. For methodological robustness purposes; GDP is added. By applying the panel vector autoregression model based-Granger causality test and a static panel data model, which are followed by robustness tests, more informative results are reported. Importantly, we find evidence of the growth hypothesis between REP and GDP, as a unidirectional Granger causality is seen from REP to GDP. Further, the neutrality hypothesis is confirmed among the remaining variables. This left us with the importance of REP in revitalizing African countries’ economic growth. All facets of REP thus should be enhanced.

Suggested Citation

  • Ahmed Rashed & Chen-Chen Yong & Siew-Voon Soon, 2022. "The nexus among foreign direct investment in renewable electricity industry, renewable electricity production, and economic growth in Africa," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2001141-200, December.
    • Handle: RePEc:taf:oaefxx:v:10:y:2022:i:1:p:2001141
    DOI: 10.1080/23322039.2021.2001141
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    Cited by:

    1. Bakari, Sayef, 2023. "The nexus between domestic investment and economic growth in MENA countries; Does unemployment matter?," MPRA Paper 118349, University Library of Munich, Germany.
    2. Appiah, Michael & Ashraf, Sania & Tiwari, Aviral Kumar & Gyamfi, Bright Akwasi & Onifade, Stephen Taiwo, 2023. "Does financialization enhance renewable energy development in Sub-Saharan African countries?," Energy Economics, Elsevier, vol. 125(C).

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