Effect of foreign direct investment on renewable energy consumption for 18 Latin American countries

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Published: Mar 19, 2022
DOI: https://doi.org/10.54753/rve.v10i1.1297

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Edwin Jiménez
Carrera de Economía, Universidad Nacional de Loja, Loja, Ecuador
Jessica Guamán
Carrera de Economía, Universidad Nacional de Loja, Loja, Ecuador

Abstract

This research evaluates the relationship between foreign direct investment and renewable energy consumption in 18 Latin American countries during the period 1990-2015. An econometric model of Generalized Least Squares (GLS) was applied with panel data, a Westerlum (2007) test to determine if there is cointegration in the long term, and also a Granger (1969) test to establish causality between the variables. The main results show that Foreign Direct Investment (FDI) has a positive effect on the consumption of renewable energy at the level of Latin America, Upper Middle Income Countries (PIMA) and Lower Middle Income Countries (PIMB). However, High Income Countries (HICs) have a negative and statistically insignificant effect. Westerlund's (2007) cointegration tests demonstrated the existence of long-term cointegration vectors between foreign direct investment and renewable energy consumption. The Dumitrescu-Hurlin causality tests demonstrated that there is bidirectional causality for the 18 countries of Latin America and PIA. The implications must be oriented to the issue of taxes on FDI to attract international companies to countries where it is almost nil to increase the consumption of renewable energy.

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How to Cite
Jiménez, E. ., & Guamán, J. . (2022). Effect of foreign direct investment on renewable energy consumption for 18 Latin American countries. Revista Económica, 10(1), 110–116. https://doi.org/10.54753/rve.v10i1.1297
Issue
Vol. 10 No. 1 (2022): RVE Vol 10 (January - June 2022)
Section
RESEARCH ARTICLES
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