Abstract
Renewable energy markets have recently emerged in countries participating in the Belt and Road Initiative (BRI). Despite having abundant renewable energy resources, these countries contribute only a small share of global renewable energy investment. This study examines the nexus between governance, renewable energy investment, and trade openness for a sample of 51 BRI countries from 1996 to 2017. Specifically, the gravity model of trade is used to develop an instrumental variable for trade openness. The empirical findings reveal that political stability, the rule of law, regulatory quality, and corruption control are statistically significant factors that influence renewable energy investments in BRI countries. Moreover, this relationship seems to depend on the degree of trade openness. Our results are robust to various econometric specifications.
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