Unveiling how renewable energy, carbon emissions, infrastructure and macroeconomic factors interact with FDI inflows in India: the ARDL and FMOLS methods
Findings reveal the dynamic relationship between renewable energy and FDI inflows in India, indicating key economic implications.
Key Points
The research investigates how renewable energy, carbon emissions, infrastructure, and macroeconomic factors influence foreign direct investment inflows in India from 1990 to 2023.
Utilized autoregressive distributed lag (ARDL) and fully modified ordinary least squares (FMOLS) methods for data analysis.
Conducted the augmented Dickey–Fuller test for unit roots.
Employed the error correction method (ECM) to analyze short-run dynamics.
Performed Granger causality tests to establish causal links between variables.
ARDL findings indicate that renewable energy generation, trade, and infrastructure have a positive long-term impact on FDI, while market size and instability negatively affect it.
Market size promotes FDI in the short term, whereas carbon emissions act as a deterrent.
Granger causality tests show that market size, FDI, and renewable energy drive domestic investment.
Trade impacts instability, which in turn affects both FDI and renewable energy.