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The global economy has recorded an unprecedented increase in growth rates in the last few decades occasioned by the expanding interconnectedness among countries through exchanging goods and services. The expanding production base has increased the demand for fossil fuels, specifically crude oil, both in local and foreign markets, leading to inevitable imports. Despite this, factors driving the increasing demand for oil imports have not been extensively researched thus calling for an empirical verification on the matter. Hence, this study contributes to the literature by investigating the tripartite effects of transportation infrastructure, economic growth, and renewable energy on crude oil imports. The empirical evidence relies on the autoregressive distributed lag (ARDL) model for bound test cointegration employed to obtain long- and short-run estimates. The empirical results from the study's analysis show that renewable energy hinders crude oil importation while transportation stimulates it in both economies. The inducing role of economic growth is substantial only in China, and the significant effect of foreign direct investment and industrialization prove to be fundamental in driving crude oil imports. Consequently, the study concludes that other explanatory variables contribute to crude oil dependence in China and India, asides from renewable energy. The post estimation tests conducted further accentuate the validity and reliability of the empirical outcomes. Drawing from the empirical outcome, the study suggests the criticality of renewable energy promotion as a viable policy decision to resolve the growth of oil dependence in the countries under study.
Yu et al. (Wed,) studied this question.