Akpanke, T. A., Deka, A., Ozdeser, H., & Seraj, M. (2023). Does foreign direct investment promote renewable energy use? An insight from West African countries. Renewable Energy Focus, 44, 124-131.
A team of researchers from the Economics Department at Near East University conducted a comprehensive study focusing on Renewable Energy (RE) development in West African countries and its association with factors like Foreign Direct Investment (FDI) and financial development. The research, covering the period from 1990 to 2021, aimed to shed light on the impact of these variables on RE consumption, providing vital insights for sustainable development in the region.
The study addresses a critical need for research focusing on the nexus between financial factors and RE development in the West African context, which remains relatively underexplored. Employing advanced data analysis techniques such as the Panel ARDL model, the research produced robust findings, considering cross-sectional dependence and endogeneity, enhancing the credibility of its outcomes.
Key findings of the study revealed compelling relationships: while GDP exhibited no significant impact on RE consumption, FDI and public sector credit demonstrated substantial positive effects on RE usage in the long run. Conversely, inflation rates displayed a significant negative long-term impact on RE consumption, emphasizing the importance of stable energy prices in promoting RE utilization.
The study's implications for policy-making are noteworthy. It suggests encouraging FDI inflows and promoting financial development in economically challenged countries to foster RE growth. Additionally, stabilizing inflation rates emerges as a crucial strategy to enhance RE development, making renewable resources more accessible and affordable.
By highlighting the impact of financial policies and foreign investments on RE adoption, this research offers actionable insights for policymakers, aiming to facilitate sustainable energy transitions in developing economies. Despite limitations related to data availability, this study underscores the imperative role of fostering financial development, attracting FDI, and maintaining stable inflation rates in driving Renewable Energy uptake. The findings offer practical pathways for West African nations to bolster their renewable energy strategies, fostering economic growth while promoting environmental sustainability.
For further details, access the original paper from the publisher's link:
https://www.sciencedirect.com/science/article/pii/S1755008422001016
