International Trade, Foreign Direct Investment, Financial Development and Renewable Energy Supply: Panel Data Evidence from Newly Industrialized Countries

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Gülçin Elif Yücel
Ayfer Ustabaş
Tuğçe Acar


In many newly industrializing countries (NICs), increased international trade activities are often triggered by several advancements, including attracting foreign direct investment (FDI), financial development, and technological changes. Recently, abundant and diversified renewable energy sources used in production have also started to take their place among these advancements. Although the relationship between FDI, financial developments, and international trade for NICs has been analyzed in many studies, incorporating renewable energy supply’s impact in this linkage has been relatively narrow. This paper aims to fill the gap in the literature by investigating the effects of renewable energy supply on FDI, financial development, and international trade for newly industrialized countries using panel causality and panel cointegration analyses between 1990 and 2019. Our findings indicate (i) uni-directional causality running from international trade to financial development, (ii) uni-directional causality running from renewable energy supply to financial development, and (iii) bi-directional causality between financial development and FDI. The result of the cointegration analysis showed that there is no long-term relationship between the variables.

JEL classification:  F14, Q27, C33

Keywords:  International trade, Foreign direct investment, Financial development, Renewable energy supply, Panel data analysis


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Yücel, G., Ustabaş, A. and Acar, T. (2022) “International Trade, Foreign Direct Investment, Financial Development and Renewable Energy Supply: Panel Data Evidence from Newly Industrialized Countries”, World Journal of Applied Economics, 8(2), pp. 51-64. doi: 10.22440/wjae.8.2.1.
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