Impact of Foreign Direct Investment on Renewable Energy Consumption in ASEAN Countries
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The climate change raises the global concern on utilizing of eco-friendly energy, the renewable energy. The current evidences indicate that consumption of renewable energy in the ASEAN countries is low. Consequently, this article scrutinizes the factors affecting renewable energy consumption in the ASEAN 5 countries by focusing the roles of foreign direct investment (FDI). The autoregressive distributed lag (ARDL) model is employed, using the data from 1990 to 2019. In addition, to increase the robustness of our work, the Toda-Yamamoto Granger causality test is performed. The empirical findings show that there are positive associations between FDI and renewable energy consumption in Indonesia, Malaysia, the Philippines, and Singapore. Moreover, GDP per capita positively contributes to renewable energy consumption in Malaysia, but the negative effect is found in Indonesia and Thailand. While the positive impact of export is observed in Malaysia and Thailand, it shows negative one in Singapore. Lastly, financial development has negative relationship with renewable energy consumption in Malaysia and the Philippines.
Abstract
The climate change raises the global concern on utilizing of eco-friendly energy, the renewable energy. The current evidences indicate that consumption of renewable energy in the ASEAN countries is low. Consequently, this article scrutinizes the factors affecting renewable energy consumption in the ASEAN 5 countries by focusing the roles of foreign direct investment (FDI). The autoregressive distributed lag (ARDL) model is employed, using the data from 1990 to 2019. In addition, to increase the robustness of our work, the Toda-Yamamoto Granger causality test is performed. The empirical findings show that there are positive associations between FDI and renewable energy consumption in Indonesia, Malaysia, the Philippines, and Singapore. Moreover, GDP per capita positively contributes to renewable energy consumption in Malaysia, but the negative effect is found in Indonesia and Thailand. While the positive impact of export is observed in Malaysia and Thailand, it shows negative one in Singapore. Lastly, financial development has negative relationship with renewable energy consumption in Malaysia and the Philippines.
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