Causal relationships between energy consumption, foreign direct investment and economic growth for MINT: Evidence from panel dynamic ordinary least square models
Abstract This research examines the interactions between economic growth, energy consumption and foreign direct investment among other factors using a panel dynamic ordinary least squares model for Mexico, Indonesia, Nigeria and Turkey (MINT) because they are emerging economies, have large population and favorable demography with high expectation for strong economic growth. To make the analysis more homogenous, these interactions were examined for individual country and as a group from 1990 to 2014 and coefficients of their long run economic growth function estimated. There exist a bi directional causal relationships between economic growth, energy consumption and FDI inflows for Mexico, a bi directional causal relationships between economic growth and energy consumption, between economic growth and FDI inflows, and an uni directional causal relationship from FDI to energy consumption for Indonesia. There also exist a bi directional causal relationships between economic growth and energy consumption, between economic growth and FDI inflows, and an uni directional causal relationship from FDI to energy consumption for Nigeria while Turkey had a bi directional causal relationships between economic growth, energy consumption and FDI inflows. Global panel reveals that there exist a bi directional causal relationships between economic growth and energy consumption, between economic growth and FDI inflows and an uni directional causal relationship from FDI to energy consumption. Diversification of economy to improve labor productivity is encouraged and over reliance on fossil fuel should be minimized.