An Empirical Analysis of the Relationship Between Multinational Enterprises and Sustainable Development of Energy Sector Under Institutional Voids
Paper presented at the Second WINIR Conference, 10-13 September 2015, Rio de Janeiro, Brazil
Posted: 1 Feb 2018
Date Written: July 1, 2015
This article aims at assessing whether multinational enterprises play a role in the reduction of energy poverty, while not causing environment degradation or inefficient usage of energy resources. Sub-Saharan Africa has been identified as an ideal test-field for this study. Using a panel of more than 1500 home-host country pairs observed from 2005 and 2011, we study the effect of foreign direct investment on the access to electricity, energy intensity and carbon factor, based on the level of economic and institutional development of home and host countries. Results reveal that institutions and income play a different role. In countries with weak institutions, foreign direct investment increases access to electricity, especially if from other institutionally backward contexts, and transfers cleaner technologies. On the contrary, in poor countries, investment from multinational enterprise increases environmental degradation without bringing any benefit to the local energy sector.
Keywords: Access to electricity, energy intensity, carbon factor, sub-Saharan Africa, FDI, institutions
JEL Classification: F23, L94, O14, O55
Suggested Citation: Suggested Citation