TY - JOUR
T1 - The impact of FDI on energy intensity
T2 - a spatial econometric analysis of Indonesian provinces
AU - Saraswati, Atina
AU - Hartono, Djoni
AU - Indriyani, Witri
N1 - Funding Information:
This research was funded by Universitas Indonesia through a Pendampingan Publikasi Internasional Q2 (PPI Q2) grant with contract number NKB-17/UN2.RST/HKP.05.00/2021.
Publisher Copyright:
© 2022, AESS.
PY - 2022/7/18
Y1 - 2022/7/18
N2 - The government of Indonesia (GoI) is committed to reducing its carbon emissions through a decline in its energy intensity while encouraging foreign direct investment (FDI) inflows to boost economic growth. Previous studies have demonstrated both positive and negative relationships between FDI inflows and energy intensity. Hence, this study investigates the impact of FDI on energy intensity in 33 Indonesian provinces from 2008 to 2015. Based on Moran’s I test, the regression revealed a significant spatial autocorrelation. The spatial Durbin model was employed to determine the direct effect of FDI on host provinces and the spillover effect on neighboring regions. The results demonstrated that FDI inflows positively and significantly impacted energy intensity in host regions and neighboring provinces. This result might be a consequence of inconsistent policies between promoting FDI and reducing energy intensity. Thus, FDI is still directed mainly to energy-intensive sectors, such as manufacturing and transportation.
AB - The government of Indonesia (GoI) is committed to reducing its carbon emissions through a decline in its energy intensity while encouraging foreign direct investment (FDI) inflows to boost economic growth. Previous studies have demonstrated both positive and negative relationships between FDI inflows and energy intensity. Hence, this study investigates the impact of FDI on energy intensity in 33 Indonesian provinces from 2008 to 2015. Based on Moran’s I test, the regression revealed a significant spatial autocorrelation. The spatial Durbin model was employed to determine the direct effect of FDI on host provinces and the spillover effect on neighboring regions. The results demonstrated that FDI inflows positively and significantly impacted energy intensity in host regions and neighboring provinces. This result might be a consequence of inconsistent policies between promoting FDI and reducing energy intensity. Thus, FDI is still directed mainly to energy-intensive sectors, such as manufacturing and transportation.
KW - Energy intensity
KW - Energy policy
KW - Foreign direct investment
KW - Spatial econometrics
KW - Spillover effect
UR - http://www.scopus.com/inward/record.url?scp=85134521652&partnerID=8YFLogxK
U2 - 10.1007/s13412-022-00775-9
DO - 10.1007/s13412-022-00775-9
M3 - Article
AN - SCOPUS:85134521652
SN - 2190-6483
VL - 12
SP - 853
EP - 869
JO - Journal of Environmental Studies and Sciences
JF - Journal of Environmental Studies and Sciences
IS - 4
ER -
