Energy Savings via Foreign Direct Investment? - Empirical evidence from Portugal
This study runs a cointegration analysis on annual data from 1980 to 2007 to investigate the relationship between primary energy consumption, economic growth and net inflows of foreign direct investment with the Engle and Granger method, Stock-Watson dynamic ordinary least squares (DOLS), the bounds testing approach to cointegration and error correction modelling. The empirical results suggest that there is a stable long run linear cointegration relationship between these three variables. While income has a large and positive influence on energy consumption, the results point to a small but negative effect of foreign direct investment (FDI) on energy consumption. As for the short-run relationship among the series, the estimation and inference in the autoregressive distributed lag error correction model (ARDL) further confirm this link. These findings have important policy implications, since the promotion of appropriate structural policies aiming at attracting foreign investment can induce energy conservation without obstructing economic growth.
|Date of creation:||Nov 2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +31 43 387 08 08
Fax: +31 43 387 08 00
Web page: http://research.msm.nl
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Chor Foon Tang, 2009. "Electricity consumption, income, foreign direct investment, and population in Malaysia: New evidence from multivariate framework analysis," Journal of Economic Studies, Emerald Group Publishing, vol. 36(4), pages 371-382, September.
- Eskeland, Gunnar S. & Harrison, Ann E., 2003.
"Moving to greener pastures? Multinationals and the pollution haven hypothesis,"
Journal of Development Economics,
Elsevier, vol. 70(1), pages 1-23, February.
- Eskeland, Gunnar S. & Harrison, Ann E., 1997. "Moving to greener pastures : multinationals and the pollution-haven hypothesis," Policy Research Working Paper Series 1744, The World Bank.
- Gunnar A. Eskeland & Ann E. Harrison, 2002. "Moving to Greener Pastures? Multinationals and the Pollution Haven Hypothesis," NBER Working Papers 8888, National Bureau of Economic Research, Inc.
- Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
- Blomstrom, Magnus & Kokko, Ari, 1998.
" Multinational Corporations and Spillovers,"
Journal of Economic Surveys,
Wiley Blackwell, vol. 12(3), pages 247-77, July.
- Blomström, Magnus & Kokko, Ari, 1996. "Multinational Corporations and Spillovers," CEPR Discussion Papers 1365, C.E.P.R. Discussion Papers.
- Blomström, Magnus & Kokko, Ari, 1996. "Multinational Corporations and Spillovers," SSE/EFI Working Paper Series in Economics and Finance 99, Stockholm School of Economics.
- Michael Hübler & Andreas Keller, 2008.
"Energy Savings via FDI? Empirical Evidence from Developing Countries,"
Kiel Working Papers
1393, Kiel Institute for the World Economy.
- Hübler, Michael & Keller, Andreas, 2010. "Energy savings via FDI? Empirical evidence from developing countries," Environment and Development Economics, Cambridge University Press, vol. 15(01), pages 59-80, February.
- James H. Stock & Mark W. Watson, 1991.
"A simple estimator of cointegrating vectors in higher order integrated systems,"
Working Paper Series, Macroeconomic Issues
91-3, Federal Reserve Bank of Chicago.
- Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
- Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
- Mielnik, Otavio & Goldemberg, Jose, 2002. "Foreign direct investment and decoupling between energy and gross domestic product in developing countries," Energy Policy, Elsevier, vol. 30(2), pages 87-89, January.
- Xu, Bin, 2000. "Multinational enterprises, technology diffusion, and host country productivity growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 477-493, August.
- Engle, R. F. & Granger, C. W. J. (ed.), 1991. "Long-Run Economic Relationships: Readings in Cointegration," OUP Catalogue, Oxford University Press, number 9780198283393, July.
- Apergis, Nicholas & Payne, James E., 2010. "Energy consumption and growth in South America: Evidence from a panel error correction model," Energy Economics, Elsevier, vol. 32(6), pages 1421-1426, November.
- Alfredo M. Pereira & Rui Manuel Marvão Pereira, 2009.
"Is Fuel-Switching a No-Regrets Environmental Policy? VAR Evidence on Carbon Dioxide Emissions, Energy Consumption and Economic Performance in Portugal,"
87, Department of Economics, College of William and Mary.
- Marvão Pereira, Alfredo & Marvão Pereira, Rui Manuel, 2010. "Is fuel-switching a no-regrets environmental policy? VAR evidence on carbon dioxide emissions, energy consumption and economic performance in Portugal," Energy Economics, Elsevier, vol. 32(1), pages 227-242, January.
- Alfredo Marvão Pereira & Rui Manuel Marvão Pereira, 2008. "Is Fuel-Switching a No-Regrets Environmental Policy? VAR Evidence on Carbon Dioxide Emissions, Energy Consumption and Economic Performance in Portugal," Economics Working Papers 05_2008, University of Évora, Department of Economics (Portugal).
- Martins, Ana Cravinho & Marques, Rui Cunha & Cruz, Carlos Oliveira, 2011. "Public-private partnerships for wind power generation: The Portuguese case," Energy Policy, Elsevier, vol. 39(1), pages 94-104, January.
- Engle, Robert F & Granger, Clive W J, 1987.
"Co-integration and Error Correction: Representation, Estimation, and Testing,"
Econometric Society, vol. 55(2), pages 251-76, March.
- Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
- Nair-Reichert, Usha & Weinhold, Diana, 2001. " Causality Tests for Cross-Country Panels: A New Look at FDI and Economic Growth in Developing Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(2), pages 153-71, May.
- M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
- Ozturk, Ilhan, 2010. "A literature survey on energy-growth nexus," Energy Policy, Elsevier, vol. 38(1), pages 340-349, January.
- Narayan, Paresh Kumar & Narayan, Seema & Prasad, Arti, 2008. "A structural VAR analysis of electricity consumption and real GDP: Evidence from the G7 countries," Energy Policy, Elsevier, vol. 36(7), pages 2765-2769, July.
- L.R. de Mello Jr., 1996.
"Foreign Direct Investment-Led Growth: Evidence from Time Series and Panel Data,"
Studies in Economics
9615, School of Economics, University of Kent.
- de Mello, Luiz R, Jr, 1999. "Foreign Direct Investment-Led Growth: Evidence from Time Series and Panel Data," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 133-51, January.
- Belloumi, Mounir, 2009. "Energy consumption and GDP in Tunisia: Cointegration and causality analysis," Energy Policy, Elsevier, vol. 37(7), pages 2745-2753, July.
- Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998.
"How does foreign direct investment affect economic growth?1,"
Journal of International Economics,
Elsevier, vol. 45(1), pages 115-135, June.
- Eduardo Borensztein & Jose De Gregorio & Jong-Wha Lee, 1995. "How Does Foreign Direct Investment Affect Economic Growth?," NBER Working Papers 5057, National Bureau of Economic Research, Inc.
- Fisher-Vanden, Karen & Jefferson, Gary H. & Liu, Hongmei & Tao, Quan, 2004. "What is driving China's decline in energy intensity?," Resource and Energy Economics, Elsevier, vol. 26(1), pages 77-97, March.
- Barrell, Ray & Pain, Nigel, 1999. "Domestic institutions, agglomerations and foreign direct investment in Europe," European Economic Review, Elsevier, vol. 43(4-6), pages 925-934, April.
- Yuan, Jiahai & Zhao, Changhong & Yu, Shunkun & Hu, Zhaoguang, 2007. "Electricity consumption and economic growth in China: Cointegration and co-feature analysis," Energy Economics, Elsevier, vol. 29(6), pages 1179-1191, November.
- James E. Payne, 2010. "Survey of the international evidence on the causal relationship between energy consumption and growth," Journal of Economic Studies, Emerald Group Publishing, vol. 37(1), pages 53-95, January.
When requesting a correction, please mention this item's handle: RePEc:msm:wpaper:2011/24. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maud de By)
If references are entirely missing, you can add them using this form.