The impact of foreign direct investment (FDI) on renewable and non-renewable energy in Bangladesh: does the global climate change emergencies required?

Elheddad, Mohamed; Alfar, Abdelrahman J.K.; Haloub, Radi; Sharma, Neetu; Gomes, Patrick

Abstract

Purpose
The purpose of this study is to identify the effects of MNCs measured by the foreign direct investment (FDI) inflows on the promotion of renewable energy consumption and non-renewable energy in Bangladesh. It is an emergency issue these days and makes some policy suggestions.

Design/methodology/approach
Based on the literature review, the study sets a time series models to empirically test FDI degrades the environmental quality in Bangladesh, using the parametric (GMM, IV estimations) and non-parametric approaches (quantile regression).

Findings
The main findings drawn from the empirical analysis are as follows. First, the FDI inflows lead to more CO2 emissions in the Bangladeshi economy. In other words, the MNCs promote the usages of non-renewable energy which causes an increase in pollution. Second, the FDI inwards discourage renewable energy consumption and in terms of magnitude, the negative impacts of FDI on renewable energy are higher than the positive effect of FDI on CO2 emissions. This makes the situation worse.

Research limitations/implications
This study is limited to Bangladesh and explores the total impact of FDI on the environment. For further investigation, it would be better to do a detailed investigation on the FDI-renewable and nonrenewable energy relationship. For instance, one could test which type of FDI promotes green energy consumption and which one is dirtier. So, the sectorial FDI effects on pollution.

Originality/value
Most past studies parametric techniques and did not compare the effects of FDI on renewable and non-renewable energy consumption, Unlike the previous empirical studies, this paper uses GMM and IV estimations for the parametric approach and quantile regression (QR) as a robustness check. Also, it is the first study that approves the crowding-out effect of non-renewable using the FDI channel.

Citation

Elheddad, M., Alfar, A. J., Haloub, R., Sharma, N., & Gomes, P. (2022). The impact of foreign direct investment (FDI) on renewable and non-renewable energy in Bangladesh: does the global climate change emergencies required?. International Journal of Emergency Services, 11(3), 409-421. https://doi.org/10.1108/ijes-12-2021-0083

• Journal Article Type: Article
• Acceptance Date: Mar 26, 2022
• Online Publication Date: Apr 12, 2022
• Publication Date: Sep 29, 2022
• Deposit Date: Sep 12, 2023
• Journal: International Journal of Emergency Services
• Print ISSN: 2047-0894
• Publisher: Emerald
• Peer Reviewed: Peer Reviewed
• Volume: 11
• Issue: 3
• Pages: 409-421
• DOI: https://doi.org/10.1108/ijes-12-2021-0083
• Keywords: Management Science and Operations Research; Safety Research