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Energy savings via FDI? Empirical evidence from developing countries

Published online by Cambridge University Press:  30 October 2009

MICHAEL HÜBLER  and
ANDREAS KELLER
MICHAEL HÜBLER
Affiliation:
Kiel Institute for the World Economy, D-24100 Kiel, Germany. Tel: +49 431 8814 401. Fax: +49 431 8814 500. Email: [email protected]
ANDREAS KELLER
Affiliation:
University of Oldenburg, D-26111 Oldenburg, Germany. Tel: +49 441 798 4445. Fax: +49 441 798 4116. Email: [email protected]
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Abstract

In this paper we examine the influence of foreign direct investment (FDI) inflows on energy intensities of developing countries empirically. We first replicate a simple ordinary least squares (OLS) estimation, as it is found in the literature, that suggests energy-intensity reductions from FDI inflows. However, the OLS estimation turns out to be spurious and only a starting point for further research. In our regressions we use macro-level panel data on 60 developing countries for the period 1975–2004, including other potential determinants of energy intensities, and carry out robustness checks with more specific data. The results do not confirm the hypothesis that aggregate FDI inflows reduce energy intensity of developing countries. Rather, foreign development aid seems to be related to energy efficiency gains.

Type
Research Article
Information
Environment and Development Economics , Volume 15 , Issue 1 , February 2010 , pp. 59 - 80
Copyright
Copyright © Cambridge University Press 2009

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