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Investigating the Link Between Foreign direct investment, Energy consumption and Economic growth in Argentina

Author

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  • Mavikela, Nomahlubi
  • Khobai, Hlalefang

Abstract

This paper investigates the relationship between energy consumption, foreign direct investment and economic growth in Argentina employing annual data covering the period from 1970 to 2016. To determine the long run relationship and the direction of causality among the variables, the Autoregressive Distributed Lag (ARDL) bounds testing approach and Vector Error Correction Model (VECM) technique are applied, respectively. The ARDL bounds tests suggested an existence of a long run relationship between energy consumption, foreign direct investments, economic growth and capital. More specifically, it was established that a 1% increase in foreign direct investments lead to a 0.013% increase in energy consumption, while a 1% increase in economic growth boots energy consumption by 0.35% in the long run. The VECM Granger-causality results suggested a unidirectional causality flowing from foreign direct investments and capital to energy consumption. A bidirectional causality flowing between energy consumption and economic growth was also established. This study brings a fresh perspective for the energy policy makers in Argentina

Suggested Citation

  • Mavikela, Nomahlubi & Khobai, Hlalefang, 2018. "Investigating the Link Between Foreign direct investment, Energy consumption and Economic growth in Argentina," MPRA Paper 83960, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:83960
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    More about this item

    Keywords

    Energy consumption; Foreign direct investment; Economic growth; ARDL;

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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    This paper has been announced in the following NEP Reports:

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