TY - JOUR
T1 - Inward foreign direct investment and inclusiveness of growth
T2 - will renewable energy consumption make a difference?
AU - Iddrisu, Khadijah
AU - Ofoeda, Isaac
AU - Abor, Joshua Yindenaba
N1 - Publisher Copyright:
© 2023, The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.
PY - 2023/7
Y1 - 2023/7
N2 - In an effort to achieve shared prosperity or inclusive growth, we investigate whether increasing foreign direct investment (FDI) flows to Africa can foster sustainable development (inclusive growth). Additionally, as the region is endowed with renewable energy, we examine whether renewable energy consumption can directly enhance inclusive growth and (or) complement FDI to enhance inclusive growth. Using 30 Sub-Saharan Africa (SSA) for 21years for the period of 2000–2020, our Generalized Method of Moment (GMM) results suggest that FDI is inclusive growth-enhancing, whereas renewable energy hampers inclusive growth. The high cost of renewable energy technologies in developing countries, such as SSA, has led to low investment in these resources, thereby explaining how renewable energy hampers inclusive growth. However, renewable energy consumption is effective in promoting the impact of FDI on inclusive growth in SSA. This is attributed to the investment opportunities in renewable energy consumption in SSA, thereby attracting foreign investors. Globally, renewable energy received about $85.2 billion in FDI in 2022, promoting job creation, revenue growth, and affordable energy access. We suggest that policymakers should attract sufficient FDI because higher levels of FDI promote inclusive growth.
AB - In an effort to achieve shared prosperity or inclusive growth, we investigate whether increasing foreign direct investment (FDI) flows to Africa can foster sustainable development (inclusive growth). Additionally, as the region is endowed with renewable energy, we examine whether renewable energy consumption can directly enhance inclusive growth and (or) complement FDI to enhance inclusive growth. Using 30 Sub-Saharan Africa (SSA) for 21years for the period of 2000–2020, our Generalized Method of Moment (GMM) results suggest that FDI is inclusive growth-enhancing, whereas renewable energy hampers inclusive growth. The high cost of renewable energy technologies in developing countries, such as SSA, has led to low investment in these resources, thereby explaining how renewable energy hampers inclusive growth. However, renewable energy consumption is effective in promoting the impact of FDI on inclusive growth in SSA. This is attributed to the investment opportunities in renewable energy consumption in SSA, thereby attracting foreign investors. Globally, renewable energy received about $85.2 billion in FDI in 2022, promoting job creation, revenue growth, and affordable energy access. We suggest that policymakers should attract sufficient FDI because higher levels of FDI promote inclusive growth.
KW - AfCFTA
KW - FDI
KW - GMM
KW - Inclusive growth
KW - Renewable energy
KW - SSA
UR - http://www.scopus.com/inward/record.url?scp=85163967078&partnerID=8YFLogxK
U2 - 10.1007/s10368-023-00562-z
DO - 10.1007/s10368-023-00562-z
M3 - Article
AN - SCOPUS:85163967078
SN - 1612-4804
VL - 20
SP - 367
EP - 388
JO - International Economics and Economic Policy
JF - International Economics and Economic Policy
IS - 3
ER -