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Boosting green energy: impact of financial development, foreign direct investment, and inflation on sustainable energy productivity in China–Pakistan economic corridor (CPEC) countries

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Abstract

This study examined the effects of financial development (FD), foreign direct investment (FDI), and inflation (INF) on sustainable energy productivity (SEP) in the CPEC economies, based on panel data per month from January 2004 to December 2020. The autoregressive distributed lag model, correlation analysis, and dynamic ordinary least squares models were used to examine the effects of the variables. The findings proved that each factor exerts a significant impact on sustainable energy productivity. The results revealed that FDI and FD positively and significantly affected SEP, while INF had negative and critical consequences. The study also discovered that these variables have short-term and long-term impacts on SEP. The outcomes showed that financial growth in CPEC countries is vital for minimizing financial risks that could negatively impact financial market stability and SEP. Long-term financing at low rates of return, investment risks, and a lack of market players were also identified as significant obstacles to green energy projects. As a result, policymakers should consider these factors for developing more effective strategies to encourage renewable energy.

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Funding

The paper is supported by the liberal arts double world-class project of Huazhong University of Science and Technology (The major discipline platform construction Rural Development Research Center of Huazhong University of Science and Technology).

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Authors and Affiliations

  1. School of Management, Huazhong University of Science and Technology (HUST), Wuhan, China

    Muhammad Suhrab & Atta Ullah

  2. School of Management, Chair of the Department of Public Finance, Vice Dean and Leader of the Institute of Poverty Reduction and Development, Huazhong University of Science and Technology (HUST), Wuhan, China

    Chen Pinglu

  3. Department of Finance, Accounting and Economics, University of Pitesti, Pitesti, Romania

    Magdalena Radulescu

  4. Institute of Doctoral and Post-Doctoral Studies, University Lucian Blaga of Sibiu, Sibiu, Romania

    Magdalena Radulescu

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  1. Muhammad Suhrab
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Contributions

MS established the research problem, compiled relevant material and data, developed and tested hypotheses, generated original ideas and concepts, and prepared and reviewed the manuscript. CP carried out and reported the findings, identified and discussed limitations and implications, and evaluated the research methods used. AU updated and synthesized existing literature, co-authored abstract, introduction and conclusion, wrote, reviewed, and edited drafts of the paper. MR analyzed, interpreted, and presented the results, and reviewed paper multiple times.

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Correspondence to Atta Ullah.

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Suhrab, M., Ullah, A., Pinglu, C. et al. Boosting green energy: impact of financial development, foreign direct investment, and inflation on sustainable energy productivity in China–Pakistan economic corridor (CPEC) countries. Environ Dev Sustain (2023). https://doi.org/10.1007/s10668-023-04093-0

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