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Energy Savings via FDI? Empirical Evidence from Developing Countries

  • Michael Hübler
  • Andreas Keller

In this paper we examine the influence of foreign direct investment inflows on energy intensities of developing countries empirically. We first show that a simple OLS estimation, as it is found in the literature, suggests energy intensity reductions from FDI inflows, which is consistent with the hypothesis of energy saving technology transfer via FDI. However, such a regression turns out to be spurious and only a starting point for further research. Therefore, we use macro level data on 60 developing countries for the period 1975-2004 including other potential determinants of energy intensities and apply panel estimation techniques and tests. The results do not confirm the hypothesis that FDI inflows reduce energy intensities of developing countries in general. Interactions of FDI with country-specific characteristics do not show significant effects, either.

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1393.

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Length: 27 pages
Date of creation: Jan 2008
Date of revision:
Handle: RePEc:kie:kieliw:1393
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