Energy Consumption, GDP, and Foreign Direct Investment in Germany

Abstract

This research studies the causal relationship between energy consumption, gross domestic product (GDP), and foreign direct investment (FDI) in Germany for a period of 1971-2010. The empirical results reveal that there is a unidirectional causality running from GDP to energy consumption and from GDP running to FDI in Germany. This is due to the highly rising trends of economic activities in the country which can lead to the expansion in energy consumption. As there is an increase in economic activities within the country, then the growth rate will be in the rising path. As a result, the foreign investors will see the promising future and then invest in the host country. The conservative energy policy is recommended to support the energy saving because it will have little or no adverse effect on GDP. The energy efficiency should be applied by encouraging the use of renewable energy sources in economic activities as an alternative to stimulate the economic growth of the country. Also, the public expenditure should be expanded to increase the country’s economy and attract foreign investors. In addition, the government should support for the service industry such as insurance, finance and banking, and tourism because this type of industry does not consume as much energy as the manufacturing industry does in the overall manufacturing processes. Besides, the government should provide tax credit for the manufacturers who can fulfill the energy efficiency for their operation.

The energy-growth nexus in Thailand: Does trade openness boost up energy consumption?

“…The share of exports was 84 percent which compare to 10 percent of capital inflows over the period 1975-2009. Therefore, it is clear that exports were predominant foreign exchange earner and the sources of grown in Thailand. Despite strong fundamental economy, but political unrests and natural disasters as such serve flooding are main course of economic down-turn in Thailand because investor and consumer do not confidence in political situation (Kuo et al [13]).…”

Association of Electricity Consumption, Economic Growth and Fdi in India

“…Pao and Tsai (2011) in their study found uni-directional causality flowing from EC to CO2, EC to GDP and oneway causal path flowing from EC to FDI for Brazil, India, China and Russia by considering data for 1980-2007. Kuo et al (2014) in their study found uni-directional causality flowing from GDP to EC and EG to FDI by considering data from 1971-2010 for Germany. Tiwari et al (2021) in their study analyzed the causal association amid GDP, FDI and EC in India.…”

“…Affirmative linkages between EG and FDI have been acknowledged by various authors (Ghazali, 2010;Attari et al, 2011;Khan & Khan, 2011;Choe, 2003). Very few studies in literature have analyzed the causality midst EG, FDI and EG particularly for Indian context (Pao & Tsai, 2011;Kuo et al, 2014). Therefore, it is imperative to explore the relationship among Foreign Direct Investment (FDI), Energy Consumption (EC) using Electricity as proxy and Economic Growth (EG) using GDP data in India.…”

Biomass Energy Consumption and Foreign Direct Investments: Evidence From Developed and Developing Countries

“…Alam (2013) has found that only in the long run, there is a causality relation from EC to FDI in India and in Pakistan, from FDI to EC. Lastly, Leitão (2015) have determined that the relationship between EC and FDI is positive and statistically significant, while Kivyiro and Arminen (2014), Kuo et al (2014) and Nyugen and Wongsurawat (2017) have found no causality relation between the series.…”