The Role of Technological Innovation and Foreign Direct Investment in Influencing Energy Intensity in China

Abstract

This article examines the role of technological innovation and foreign direct investment on energy intensity in China by employing yearly data from 1990 to 2020. For this purpose, ADF test and ARDL model are utilized for data estimation. The results exhibit that technological innovation and foreign direct investment are negative and significant factors of energy intensity in China. Likewise, the interaction term of FDI and technological innovation also significantly reduces China's intensity of energy. In contrast, the variables urbanization and gross fixed capital formation are encouraging factors of energy intensity. Considering the study outcomes, it is concluded that technological innovation and FDI play an imperative role in declining intensity of energy in China. Therefore, technological innovation and FDI inflows that encourage energy-saving technology to decline the intensity of energy in China should be encouraged.