Role of foreign direct investment and economic growth in renewable energy development

Abstract

Since China's economic reform, the country's economy has thrived. Chinese foreign direct investment is attracting more and more attention throughout the globe. Although China's energy issues and environmental degradation have worsened as the economy has grown, the energy consumption structure has become more problematic. The generation of green finance and renewable energy resources is essential to addressing environmental issues and achieving sustainable development. Using data from 30 Chinese provinces from 2000 to 2019, this research examines the link between green finance, foreign direct investment, and GDP. Only economic growth is detected I(2) in the second stage, which uses first-generation and second-generation unit root tests for panel data (0). Due to these considerations, we adopted an autoregressive distributed lag technique with a Pooled Mean Group, Mean Group, and Dynamic Fixed Effect estimation model. According to the findings, only renewable energy was shown to be substantial and negative in terms of Greenhouse gas emissions, while FDI was determined to be important and beneficial only in the long run. This study shows that we need more strategic thinking about how we can deploy in the renewable sector while also advancing techniques, advancement, human capital, research, and development that will boost green finance production and sustainable development in the long run.