Heliyon 9 (2023) e14635

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Heliyon
journal homepage: www.cell.com/heliyon

Research article

Effects of globalization, foreign direct investment and economic

growth on renewable electricity consumption
Gulzara Tariq a, *, Huaping Sun a, b, Unai Fernandez-Gamiz c, Sofia Mansoor d,
Amjad Ali Pasha e, Sajjad Ali f, Muhammad Sohail Khan g
a
School of Finance & Economics, Jiangsu University, Zhenjiang 212013, Jiangsu, China
b
School of Economics and Management, Xinjiang University, Urumqi 830046, Xinjiang, China
c
Nuclear Engineering and Fluid Mechanics Department, University of the Basque Country UPV/EHU, Nieves Cano 12, 01006 Vitoria-Gasteiz, Spain
d
University of Peshawar, Peshawar, Pakistan
e
Faculty of Engineering, Aerospace Engineering Department, King Abdulaziz University, Jeddah 21589, Saudi Arabia
f
School of Management, Jiangsu University, Zhenjiang 212013, Jiangsu, China
g
School of Mathematical Sciences, Jiangsu University, Zhenjiang 212013, Jiangsu, China

A R T I C L E I N F O A B S T R A C T

Keywords: Renewable energy has been seen as a viable solution to the problems of environmental degra­
Globalization dation and the energy crisis. This study examines the long – and short–run linkages between
Economic growth economic globalization, foreign direct investment (FDI), economic growth, and renewable elec­
Trade openness
tricity consumption in China’s Belt and Road Initiative (BRI) countries. Therefore, this study uses
Foreign direct investment
the Pooled Mean Group (PMG) autoregressive distributed lag (ARDL) technique to measure the
Renewable electricity consumption
Belt and road initiative relationship between constructs based on data collected from 2000 to 2020. The overall results
show the collaborative integration of Belt and Road (BRI) countries in terms of globalization,
economic growth, and renewable electricity utilization. The results show that there is a long-term
positive relationship between FDI and renewable electricity consumption, but a negative rela­
tionship in the short term. Furthermore, economic growth is positively correlated with renewable
electricity consumption in the long run and negatively correlated in the short run. This study
suggests that the governments of BRI countries should encourage globalization by improving
technology and knowledge related to renewable electricity consumption in all areas.

1. Introduction

Preservation of energy could be the key to economic development [1]. China’s share in global consumption of energy is 2.9% and
6.1% per year since 2016–2017 and 2000–2017, respectively [2]. The Chinese economy has consistantly ranked higher than the US
since 2009 in terms of energy consumption. Quantitatively, China consumed 871 Mtoe in 1990 and 3105 Mtoe in 2017 EIA [3]. While,
recovering from the COVID-19 crisis, China’s electric power consumption rose by 3.1% and held 29% of the world’s electric power
consumption in 2020 EnerData [4]. In 2018, nearly 60% of China’s coal use was accounted for by the electricity sector, with the
balance coming from industry EIA [5]. China’s average daily electricity consumption rose from 17.1 to 205.1 (100 million kW-h) from

* Corresponding author.
E-mail addresses: gulcute327@gmail.com (G. Tariq), shp797@163.com (H. Sun), unai.fernandez@ehu.eus (U. Fernandez-Gamiz), sofia@uop.
edu.pk (S. Mansoor), amjadalipasha@gmail.com (A.A. Pasha), sajjadalikhan619@ujs.edu.cn (S. Ali), sohailkhan8688@gmail.com (M.S. Khan).

https://doi.org/10.1016/j.heliyon.2023.e14635
Received 23 May 2022; Received in revised form 1 March 2023; Accepted 13 March 2023
Available online 16 March 2023
2405-8440/© 2023 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY license
(http://creativecommons.org/licenses/by/4.0/).
G. Tariq et al. Heliyon 9 (2023) e14635

1990 to 2019 [6]. Moreover, such an increase in energy consumption transmuted China to an energy importer from an energy exporter.
Therefore, an affordable and stable energy supply is crucial for economic growth and national security [7–10], such an increase in
foreign energy supply has given China a perilous position [11–13].
China began to open its economy and sign several regional trade treaties in the early 1980s. In the meantime, on December 11,
2001 association of China with the World Trade Organization (WTO) began, which underwent another wave of trade, thereby
increasing the collective stock from 1085.29 billion to 203.14 billion dollars until 2014. China took the initiative towards BRI (belt and
road initiative) during their visit to Kazakhstan and Indonesia in 2013. The primary focus of this initiative was to invest in education,
railways, infrastructural investment, the power grid, automobiles, iron, real estate, and highways. At present, 68 countries are
contributing to BRI. It was established for the strong relationship between countries, financial development, and excellent connectivity
among different countries. Scholars nowadays endeavor to study the link amongst economic growth and energy usage [14,15]. In
recent studies, the focus of academics changed from energy use to electricity usage, as obtaining and measuring data is more
manageable than energy consumption [16]. Energy consumption analysis is more precisely revealed by electricity consumption
analysis [17]. Previously, it was reported that trade openness and FDI create jobs, increase output, and increase real wage growth and
technology spillovers [18–21]. In addition, it is easy to state that globalization has been the main factor in modernizing the economy in
recent decades. Without a consistent supply of energy, globalization is impossible [22,23].
A long-run asymmetric link between FDI, trade, and energy usage was also accessed in previous studies [24]. Previous studies
reported that FDI upturns energy consumption in host economies [25–27]. Renewable energy use, FDI, and trade openness all
contribute to economic development [28]. However, the long-term relationship between globalization, economic growth, and
renewable electricity has not been well established by previous scholars [29–32]. Therefore, this study seeks to determine the rela­
tionship between globalization, economic growth, FDI, and renewable electricity consumption, not only in the short run but also in the
long term. This will help decision-makers have a strong understanding of core relationships and facilitate long – and short–term
strategic decision-making.
Moreover, this study has made numerous contributions to the literature of energy/electricity economics: (i) this study adds to the
current body of knowledge by investigating the dynamic link between renewable and non-renewable electricity usage, where elec­
tricity from fossil fuels is considered non-renewable electricity consumption. Foreign direct investment and economic growth potential
are also evaluated in the energy demand function to avoid the specification problem. (ii) The second-generation unit root test was used
to investigate variable integration (iii) The Pedroni and Kao co-integration approach was applied to examine co-integrating between
renewable electricity consumption and its determinants. (iv) PMG ARDL model was applied to examine the impacts of globalization
and economic growth on renewable electricity usage; BRI countries were also evaluated according to their regions. (v) To check the
causal association among renewable electricity consumption and its factors, the rolling panel causality test is employed.
This study will assist policymakers in developing inclusive energy policies to ensure long-term development. Overall, the results
show the cointegration among renewable electricity consumption, trade openness, economic development, and FDI.
The study is structured as follows: Section 2 evaluates the previous work concerning numerous phases of renewable electricity
consumption. Part 3 defines the data, methodology, and model. Part 4 explains the findings, and Part 5 discusses the conclusion and
policy implications.

2. Relevant literature

Many existing works on the link between FDI, economic growth, trade openness, and energy consumption neglected the potential
connection among renewable electricity usage, economic growth, trade openness, and FDI in BRI economies. Thus, this negligence may
produce misleading results for different countries. Before establishing prior anticipations on these variables, this study discusses the
bilateral relation between FDI and renewable electricity consumption, as well as the connection among economic growth and
renewable electricity consumption and trade and renewable power consumption. The majority of the existing literature examines the
causal relationship between energy/electricity consumption and economic growth using annual data [33–40]. Using a 24-year annual
dataset, Acheampong [41] clarified that economic expansion has no influence on global and regional energy consumption.
Apergis et al. [42] focused on a specific geographic region; Eurasia covered the period of 1992–2007 and showed the reaction
theory held for renewable power consumption. Apergis and Payne studied Central America and clarified the long-term and short-term
feedback and growth consequences of renewable energy. By employing 35 years of panel data, Wolde-Rufael and Yemane discovered
the connection among economic development and electricity depletion [43]. Many scholars attempted to explore the connection
among economic development and energy/electricity ingesting at the monthly [44–46] or quarterly [17,47–49]. Huang et al. [50]
selected 82 countries from 1972 to 2002 by four income groups and reported no confirmation for the growth hypothesis. Omri [51]
acquired data from 65 countries from 1990 to 2011 using per capita income and confirmed growth and feedback theory in low-income
and middle-income states.
Phrakhruopatnontakitti et al. [52] sustained the existence of two-way connections in Malaysia. Nugraha et al. [53] and Farabi [54]
for Indonesia supported a neutral cause among energy consumption and economic development. From 1980 to 2012, Hassine et al.
[55] investigated the causality between real GDP, financial development, trade, and renewable energy ingesting in Gulf countries;
renewable energy depletion increases economic development in Gulf countries. Cetin et al. [56] used the VECM Granger causality
approach to investigate the causality between trade openness, economic development, and energy usage, for upper-middle-income
nations from 1971 to 2014. Tariq et al. [57,58] found positive long-run associations among trade openness, energy consumption,
and economic development. Sun et al. [59] found a positive association among globalization and environmental pollution in SAARC
countries. In Pakistan and India, Tariq et al. [60] examined associations among FDI, economic growth, and trade openness and found

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positive effects on the environment.

Alam et al. [61] revealed that the long-term usage of renewable energy in OECD nations is highly influenced by economic
development, trade openness, and technical advancement. According to the findings of Naimoğlu and Mustafa [62] the long-term
coefficient estimation shows that economic development and technical advancement are crucial factors in Turkey’s growing usage
of renewable energy. Azam et al. [63] used FMOLS and elaborated that economic growth was boosted by 0.095% and 0.017%,
respectively, for every 1% increase in the use of renewable and non-renewable electricity. Shahbaz et al. [64] indicated the existence of
a long-term connection between the use of renewable energy and economic expansion. Additionally, they noticed that consumption of
renewable energy, together with non-renewable energy, labor, and capital, has a favorable influence on economic growth in 38
countries that consume renewable energy.
Ma et al. [65], by regulating significant regional heterogeneity, used provincial data from 1995 to 2004 and concluded the intensity
of energy rises because of the use of energy-intensive equipment in the export sector. Even though, Hübler [66] explored the positive
correlation among energy production and imports. Though, Shahbaz et al. [67] determined the feedback effect among trade and
energy use. Hence, Herrerias et al. [68] used a cross-sectioned time series of provincial data from 1985 to 2008 and explored the
inverse association between energy intensity and imports.
Efficient resource allocation in financial markets boosts growth and increases private energy consumption [67,69–71]. Although,
affordable prices in the financial markets improve the purchase of consumer durables, ultimately increasing the energy demand [64,
72,73]. Hence, the lower the cost of borrowing in the financial market supports households and businesses to get energy preserving
technologies, which in the long run decreases the energy demand [74,75].
Smyth et al. [76] reported a significant lack of research as described above in that they all ignored the impacts of renewable energy
on FDI and the energy nexus. Paramati et al. [77] investigated the panel data of 20 developing economies during 1991–2012, explored
the effects of FDI upon clean energy, and explained the positive long-term association among FDI and renewable energy. Doytch et al.
[78] used 74 countries from 1985 to 2012 and demonstrated the positive correlation between renewable energy and FDI. Furthermore,
they segregated their sample based on capital income and concluded that FDI in the manufacturing sector reduces renewable energy
demand while raising it in financial sector. Salim et al. [75] proposed an unfavorable association among energy and FDI in the short
term and a positive association in the long term.
There is currently no research focusing on globalization, economic growth, and renewable electricity usage in BRI countries.
Despite globalization’s important role in BRI economies, it is critical to investigate the long-run and short-run dynamics of trade
openness, economic growth, and renewable electricity use from 2000 to 2020. Therefore, the purpose of this research is to generate the
objectives and knowledge necessary to give policy implications to the governments of BRI economies.

3. Methodology and estimation methods

3.1. Model

Prior research found numerous links between power use, trade openness, and economic development. Smyth et al. [76] explained
that the variation might be due to industrial characteristics, economic approaches, variable selection, model specification, and time
period selection. To improve these distresses, the following model has been developed:
REC = f (FDI, TO, GDP) (1)

Where REC is renewable electricity consumption, FDI is the flow of foreign direct investment, TO is trade openness used as a proxy
forglobalization, and GDP is the real income per capita used as a control variable. The following equation was obtained after applying
the linear transformation to empirical investigations on Eq. (1):
RECit = β1 + β2 FDIit + β3 TOit + β4 GDPit + εit (2)

where t denotes time and μt represents Gaussian errors. Eq. 2 β’s denotes long-run elasticity. This description also measures the as­
sociation among electricity consumption and economic growth where technology improvements arise due to increased FDI and trade
openness [67].
In our framework, trade openness was the second determinant of electricity consumption. Previous literature shows that FDI and
trade openness are other useful determinants for renewable electricity consumption, but economic growth and trade openness increase
renewable electricity consumption, so β2 is positive in Eq. (2).
The increase in exports increases renewable electricity consumption to meet foreign requirements, directly influencing trade
openness. Higher exports require extra raw materials and more exporting goods; which increases renewable electricity consumption.
This expects the sign β3 to be positive in Eq. (2), reflecting the positive association among electricity and trade openness. The purpose
of this study is to look into the relationship between economic growth, FDI, trade openness, and electricity usage. The literature reveals
that the nexus between growth and energy highly depends upon economic development [57]. The positive β4 in Eq. (2) denotes the
positive correlation between economic growth and renewable electricity usage. Currently, no reported work shows the exact sign of β3
and β4 in BRI. Therefore, the major goals of this study is to reduce the uncertainty associated with electricity use and increase trade
openness.

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3.2. Data

This research covers the annual observations of BRI from 2000 to 2020 due to the availability of data. To further find out the
association between different sub-panels of countries, BRI is divided according to the geographical region named as, the Middle East
and Africa (MEA), Central and Western Asia (CWA), South Asia (SA), Central and Eastern Europe (CEE), South East Asia (SEA). Data for
trade, economic growth per capita, and FDI are sourced from the World Development Indicators [76]. Trade (as a percentage of GDP) is
used as a proxy for trade openness or globalisation, whereas GDP per capita growth annual percentage is used as a proxy for economic
growth, FDI is net inflows of foreign direct investment (BoP, current US$). Data related to renewable electricity consumption (REC) is
extracted from Our World in Data [79]. All the data is transformed into a natural log. Figs. 1–5 depict data trends according to region.

3.3. Methodology

This study began with the baseline model and tested the cross-sectional dependency of variables using the Pesaran CD, Pesaran
scaled LM, and Breusch-Pagan LM tests. The next step is to investigate variable stationarity in panel data in the case of cross-sectional
dependency. According to Kasman et al. [80], each panel unit root test has strengths and weaknesses. Four unit root trials, namely
Levin Lin and Chu [81], Breitun J. [82], lm Pesaran and Shin [83], and Phillips-Perron (PP) tests, are applied in this study for
increasing robustness. The panel unit root test developed by Levin Lin and Chu [79] is an extension of the augmented Dickey-Fuller
test, which is given as
∑
mi
ΔBit = δit ψi +gBit− 1 + δikBi,t− k +ωit (3)
k=1

Where g represents autoregressive coefficients, δit indicated individual deterministic variables, m is lag order, and ω representing error
term.
It is assumed in the Levin Lin and Chu [81] test that g remain constant across countries. Levin Lin and Chu [81] the test is prolonged
from lm Pesaran and Shin [83] test, which lets g to vary among countries. Breitun J [82]. is a test that corrects for bias produced by the
LLC [81] and IPS [83] tests, as well as gave following equation:
g+1
∑
Bit = φit + βij ait− t + εit (4)
j=1

According to (Hlouskova and Narayan [84,85]), the LPS [82] test has some limitations plus advantages too. The best benefit is that
it has the highest power and the smallest sample size biases, whereas the limitation is that the autoregressive coefficient remains the
same across countries.
Pedroni [86,87] developed panel and group co-integration tests. Panel rho-Statistics, Panel v-Statistics, Panel pp-Statistics, and
Panel ADF-Statistics are all within dimension approaches used by the panel test. It also contains between dimension approaches: Group
ADF-Statistics, Group PP-Statistics, and Group rho-Statistics Pedroni’s [84,85] cointegration assessment assumes that H0: No
co-integration among variablesThese all seven tests, which are asymptotically dispersed as regular standard, are defined as the ex­
pected residuals from the long-run model shown below.

Fig. 1. Data distribution of SA countries.

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G. Tariq et al. Heliyon 9 (2023) e14635

Fig. 2. Data distribution of CEE countries.

Fig. 3. Data distribution of CWA countries.

∑
n
Bit = φi + λi + βik Akit + εit (5)
k=1

where A and B are planned to be incorporated into order one levels.

In Eq. (6) the projected residuals are recorded.
εit = gi εit− 1 + μit (6)
The maximum likelihood-based panel co-integration statistics will be compared to three between-dimension and four within-
dimension statistics in this study.
Pedroni’s (1999, 2004) study of cointegration system for panel data is stated in Eq. (7) below:
Bit = φi + βAit + εit (7)
Kao [88] proposes another co-integration test to estimate the homogeneous co-integration association. Kao [86] proposes two tests
for the null hypothesis of no co-integration: the Dickey-Fuller type and the Augmented Dickey-Fuller tests.
Following the establishment of panel co-integration, this research looks at both the short and long run connections among the

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Fig. 4. Data distribution of SEA countries.

Fig. 5. Data distribution of MEA countries.

variables using the PMG ARDL approach. This approach was adopted to allow the mixed order of integrated variables used under the
unified framework. Optimal lag length selection also alleviates spurious regression. This broad-based strategy establishes a long-term
link between variables. In addition, the structure of lag provides consistent findings and mitigates the issue of serial correlation in the
presence of endogenous regressors. It also gives exceptionally consistent long-run and short-run values. The PMG AR distribution lag
represents Eq. (2) as follows:
lRECit = δ1 lTOit + δ2 lTOi,t− 1 + δ3 lGDPit + δ4 lGDPi,t−
(8)
1
+δ5 lFDIit + δ6 lFDIi,t− 1 + φlRECi,t− 1 + μi + υi

The error correction term is provided as:

( )
ΔRECit = θi lRECi,t− 1 − α0 − β1i lTOit − β2i lGDPit − β3i lFDIit
(9)
+δ1 ΔlTOit + δ2 ΔlGDPit + δ1 ΔlFDIit + σ i
In Eq. (9), an error correction term is denoted by θ, Δ symbolized the first difference operator, the log of variables is signified by l,
values of long run are shown by β, short run values are rpresented by δ, ε represented the error term, and t indicated time.
At last, this study outperforms Dumitrescu-Hurlin (DH) panel causality test [89]. This test, for example, includes cross-sectional

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dependency, and the time and size of the cross-section relative to each other are unimportant. This test presents two separate dis­
tributions: asymptotic and semi-asymptotic. When T is greater than N, the asymptotic distribution is used; when N is greater than T, the
semi-asymptotic distribution is used. In panel data, the following model finds DH causality:
∑
J ∑
J
Zit = αi + τJii Zi,t− J + βJii Xi,t− J + εi,t (10)
j=1 j=1

Where Xi,t and Zi,t are the observations of two stationary variables for individual I in period t, j is the lag length, τJi is the autoregressive
parameter, and βJi is the regression coefficient that changes across groups. With a balanced panel, it is believed that lag order J is the
same for all people. This is a fixed-type test that produces a fixed coefficient model. It enables heterogeneity while preserving normal
distribution.

4. Empirical results and discussion

The mean, maximum, and standard deviation of trade openness, renewable power consumption, economic growth, and FDI are
shown in Table 1.
The highest renewable electricity consumption (2212.54) is recorded in China, while Turkmenistan had the lowest renewable
electricity consumption (0.0003) in 2019. China and Lebanon have the greatest (2.116522893) and lowest (− 21.11600443) GDP per
capita values. Singapore (320.5635138) is at the top in globalization or trade openness.

4.1. Cross-sectional dependence test

This research started with the baseline model presented in Table 2 and used the Breusch-Pagan LM, Pesaran scaled LM, and Pesaran
CD tests to examine the cross-sectional dependency of variables. As the probability is < 0.5, the null hypothesis is rejected as H0:
Variables do not have a serial correlation.

Serial Correlation Test

BRI CEE MEA

Test Stat. Prob. Stat. Prob. Stat. Prob.

Breusch-Pagan LM 5525.849 0.0000 958.8660 0.0000 241.1607 0.0000

Pesaran scaled LM 67.35643 0.0000 46.06329 0.0000 11.13065 0.0000
Pesaran CD 28.60598 0.0000 11.75485 0.0000 0.531051 0.5954
CWA SA SEA
Test Stat. Prob. Stat. Prob. Stat. Prob.
Breusch-Pagan LM 114.5133 0.0000 36.20925 0.0016 147.7128 0.0000
Pesaran scaled LM 7.327347 0.0000 3.872262 0.0001 10.82688 0.0000
Pesaran CD 7.226900 0.0000 − 1.048614 0.2944 1.351272 0.1766

4.2. Second generation unit root test

Due to serial correlation, four tests are utilized in this work to establish the sequence of data integration: Levin and Lin, Breitung, Im
Pesaran and Shin [79–81], and Fisher-PP. Table 3 shows the results of second-panel unit root testing. According to the results, the
dataset has a unit root at level and is stationary at the first difference.

4.3. Co-integration checks

To analyze the co-integration of variables, this study used two co-integration tests developed by Pedroni [84,85] and Kao [86]. The
results of the co-integration tests are summarized in Table 4. This study observed three homogenous statistics and two heterogenous
statistics of Pedroni [86,87] are statistically significant at 1% in BRI countries and its regions; this demonstrates that the alternative
hypothesis about the existence of co-integration is accepted.
Furthermore, the co-integration test statistics provided by Kao [88] demonstrated that the null hypothesis was rejected and
accepted alternative hypothesis of cointegration. As a result, both co-integration checks disclose that the globalization index’s
renewable power consumption, economic growth, trade openness, and FDI are co-integrated and have a long-term connection.

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Table 1
Descriptive statistics.
Variables Mean Max. Min. SD Obs.

BRI
REC 0.449357 3.310323 − 3.948913 1.129932 1002
GDP 3.95578 49.48028 − 38.41823 4.460221 1002
FDI 9.207394 11.46379 5.997877 0.834617 1002
TO 1.934765 2.640806 1.403227 0.212714 1002
CEE
REC 0.520552 2.295484 − 1.744727 0.765510 344
GDP 4.153678 12.99696 − 14.46433 3.678390 344
FDI 9.218194 10.96456 7.525536 0.662621 344
TO 2.005775 2.280347 1.665460 0.138831 344
CWA
REC 0.272340 1.814461 − 3.948913 1.246526 194
GDP 15.31567 33.03049 − 13.51939 5.188496 194
FDI 8.883112 10.23606 6.668569 0.687224 194
TO 1.891455 2.243909 1.465268 0.154345 194
MEA
REC − 0.285949 2.114630 − 3.00 1.309214 170
GDP 1.143672 49.48028 − 38.41823 5.996282 170
FDI 9.376639 10.34335 7.812202 0.576680 170
TO 1.905971 2.283013 1.480676 0.180914 170
SA
REC 0.937635 2.459650 − 0.326979 0.739914 112
GDP 4.314932 17.03122 − 2.243643 2.526166 112
FDI 8.701855 10.70424 5.997877 1.145838 112
TO 1.677881 2.066511 1.403227 1.145838 112
SEA
REC 0.887780 3.310323 − 2.6989891 1.212902 181
GDP 4.554989 13.63582 − 3.784520 2.877514 181
FDI 9.692274 11.46379 6.648487 0.932703 181
TO 2.035158 2.640806 1.554975 0.271759 181

Max. denotes maximum, Min. represents minimum, and SD signifies Standard Deviation.

Table 2
Results of the base line model.
BRI CEE MEA CWA SEA SA

Vr, Coef. Coef. Coef. Coef. Coef. Coef.

GDP 0.029213*** − 0.025281*** 0.029765** − 0.266913*** 0.073525*** − 0.043110***

TO − 1.787053*** − 2.494992*** − 4.734048*** − 1.692128 − 1.833426*** 0.886352**
FDI 0.0434624*** 0.509256*** 0.356110*** − 1.041917** 0.684812*** 0.460601***
C − 0.182807* 0.935531* 5.363849*** 20.68204*** − 2.353198*** − 4.371623***

***Indicates significant at the 1%, ** Indicates significant at the 5%, and * significant at the 10% level is shown.

4.4. PMG ARDL estimates

This study may now examine the short and long-term associations because co-integration among the variables has been proven. For
this objective, the panel PMG ARDL approach is initially used in this work. Tables 5 and 6 show the predicted outcomes of the panel
PMG approach. The short-run results of Eq. (9) are reported in Table 5. Based on the optimal structure, lag 1 is used. The acquired
results reported that FDI is negative and insignificant with respect to renewable electricity consumption in BRI, CWA, MEA, and SEA
countries. The 1% increase in FDI reduces 0.01% of renewable electricity consumption. Prior studies [25,31,59,86] have found a
significant effect on energy use. The energy-conserving techniques brought by FDI also reduced renewable electricity consumption
[66,90–93]. Renewable electricity consumption might be higher during the planning phase [94]. Su et al. [95] reported that weak
absorptive capacities could prevent firms from adopting energy-efficient technology.
Economic growth in the short run was negatively correlated with renewable electricity consumption in BRI, CWE, CEE, and MEA
countries. The result showed that a 1% escalation in growth lowers renewable electricity depletion by 0.039%, 0.034%, 0.0325%, and
0.00042% respectively. It can be explained that as income per capita increases, the capacity to purchase durable technology with
efficient energy consumption increases, due to which renewable electricity consumption decreases. Trade openness is positively
correlated with renewable electricity consumption in BRI, CWA, CEE, and SA countries. A 1% upsurge in globalization enhanced
renewable electricity use by 0.015% in BRI countries. Negative ECT verified the association between trade openness, FDI, economic
growth, and renewable electricity consumption for all regions in the short-run. ECT in BRI countries also revealed that an 8% decrease
in renewable electricity consumption is rectified in the near term by deviations from long-run equilibria.
Table 6 shows the long-run elasticities. For BRI, CEE, and SA economies, there is a positive and strong relationship between FDI and

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Table 3
Unit Root tests.
Panel Countries

Vr. LLC Breitung t-stat CIPS PP

I(0) I (1) I(0) I (1) I(0) I (1) I(0) I (1)

REC 7.35005 − 25.7320*** 6.70057 − 4.78050*** 1.61639 − 21.3635*** 208.887*** 707.741***

FDI − 7.51391*** − 27.6740*** − 5.11549 54.0646*** − 5.50169*** − 22.0800*** 236.516*** 793.641***
GDP − 6.34976*** − 25.9833*** 25.5310*** 79.6758*** − 8.7952*** − 14.2503*** 14.1901*** 36.8232***
TO − 4.38210*** − 23.5759*** 3.00155 − 6.75865*** 0.07688 − 17.0719*** 126.207 548.670***
CEE
REC 0.5419 − 17.8429*** − 1.59897* − 11.2967*** − 4.29042*** − 13.9482*** 130.258*** 302.728***
FDI − 3.03571** − 14.9550*** − 2.87200*** − 11.5634*** − 0.70655 − 11.0908*** 42.6851 260.121***
GDP − 4.91278*** − 15.3982*** − 0.10399 − 3.30495*** − 4.82614*** − 13.1458*** 79.1274*** 258.811***
TO − 0.45383 − 11.2877*** 1.29920 − 5.59112*** 0.60163 − 8.28521*** 29.5718 170.773***
CWA
REC − 1.34980 − 8.25570*** 1.18890 − 0.04352** − 0.88844 − 5.96153*** 24.1126 84.7336***
FDI − 5.05871*** − 10.1036*** 1.73946 − 1.77687*** − 1.42297 − 9.52266*** 48.5693*** 142.968***
GDP − 3.63601*** − 9.94922*** 0.52435 − 3.62608*** − 2.37424*** − 8.10911*** 42.4191*** 146.921***
TO 1.35600 − 4.67992** 1.47398 2.9546*** 1.35077 − 4.50008*** 13.6962 68.9972***
SA
REC − 0.65149 − 6.15642*** 0.30283 − 3.57155*** − 0.60384 − 4.25094*** 33.0948*** 66.9894***
FDI − 3.16391*** − 4.41925*** − 1.16153 − 1.94166*** − 1.13094 − 4.25297*** 12.9709 65.9277***
GDP 2.88555 − 0.96573*** 5.11943 − 3.62608*** 0.20182 − 2.35665*** 10.8132 68.7099***
TO − 1.31575 − 3.34523** 1.38599 − 0.57368* 0.15726 − 3.03637*** 5.84415 35.9819***
SEA
REC 0.26981 − 2.28544*** − 0.47317 − 3.44042*** 0.15637 − 4.03232*** 44.2327** 139.482***
FDI 0.21111 − 8.17921*** − 1.65439* − 2.10282*** − 0.29460 − 5.92186*** 70.0549*** 173.879***
GDP 4.14339 − 3.17758*** 7.41968 − 5.80895*** 1.14632 − 3.23921*** 34.0921** 130.905***
TO − 1.64964* − 36.2454** − 0.54685 − 1.77150*** − 1.59979* − 13.4573*** 39.8445** 120.862***
MEA
REC − 1.32555 − 4.89689*** − 0.86899 − 3.77340*** 0.37519 − 5.16331*** 19.8912 119.682***
FDI − 0.92904 − 4.51324*** 0.36787 − 0.30826** − 2.58278** − 2.83215*** 50.8896*** 174.409***
GDP − 2.00870* 5.97386*** 0.11962 − 1.41952*** − 2.41505*** − 6.40417*** 70.2850*** 188.608***
TO − 0.80734 − 5.72091** 0.81327 − 2.94732*** − 0.28808 − 6.15373*** 36.9803 151.133***

*** Indicates significant at the 1%, ** Indicates significant at the 5%, and * significant at the 10% level is shown.

renewable electricity use. For BRI countries, empirical results revealed that an increase in FDI upsurges 0.04% renewable electricity
use while holding other things constant; this finding is consistent with the findings of Phrakhruopatnontakitti et al. [71]. When in­
vestment increases in the economy, energy consumption also increases, affecting renewable electricity consumption. Moreover,
governments of different countries struggle with the diffusion of old technology with new energy-efficient technology.

Table 4
Panel Co-integration tests.
BRI CEE MEA

Residual co-integration test by Pedroni [86,87]

Stat. Pr Stat. Pr Stat. Pr
Panel v-Statistics 61.85165 0.0000 1.230628 0.1092 2.847310 0.0022
Panel rho-Statistics 1.853247 0.1681 2.692238 0.9965 1.894370 0.9709
Panel pp-Statistics − 9.252117 0.0000 − 1.793846 0.0364 − 2.786756 0.0027
Panel ADF-Statistics − 5.013338 0.0000 − 4.677310 0.0000 − 0.800251 0.0231
Group rho-Statistics 6.411627 0.1289 3.584839 0.9998 3.295827 0.9995
Group PP-Statistics − 8.091501 0.0000 − 6.939207 0.0000 − 3.530917 0.0002
Group ADF-Statistics − 1.147566 0.1256 − 4.392661 0.0000 − 1.424954 0.0771
Kao [88] Cointegration Test
ADF 7.17.598 0.0000 − 2.889336 0.0019 − 2.973762 0.0035
CWA SA SEA
Residual co-integration test by Pedroni [86,87]
Stat. Prob. Stat. Prob. Stat. Prob.
Panel v-Statistics 4.825849 0.0000 0.014995 0.4940 26.67107 0.0000
Panel rho-Statistics 0.763347 0.7774 − 0.251648 0.4007 0.774140 0.7806
Panel pp-Statistics − 3.533649 0.0002 − 4.336262 0.0000 − 3.986463 0.0000
Panel ADF-Statistics − 3.102329 0.0010 − 1.0406144 0.1343 − 2.075264 0.0190
Group rho-Statistics 2.450229 0.9929 1.447830 0.9262 1.841955 0.9673
Group PP-Statistics − 2.945187 0.0016 − 2.986617 0.0014 − 3.509698 0.0002
Group ADF-Statistics − 2.604491 0.0046 0.153422 0.5610 − 0.854375 0.1964
Kao [88] Cointegration Test
ADF − 2.399751 0.0082 − 1.731595 0.0417 2.038583 0.0207

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Table 5
Short run estimates.
REC is the dependent variable

BRI CEE CWA

Vr. Coef. z- value Coef. z- value Coef. z- value

FDI − 1.03 − 0.54 0.00024 1.86* − 0.00007 − 4.66***

GDP − 3.916556 − 2.28** − 3.480441 − 1.98** − 3.250823 − 1.73**
TO 1.530833 1.03* 5.805423 4.08*** 2.354455 2.63***
ECT − 0.0821197 − 5.84*** − 0.1395717 − 4.42*** − 0.1496543 − 4.66*
MEA SA SEA
FDI − 0.00032 − 1.33 0.00843 1.40 − 0.000848 − 1.12
GDP − 0.0426269 − 0.01 0.9723277 2.07** 0.1237094 0.09*
TO − 3.201837 − 0.51 0.6004809 1.23 − 0.5482837 0.60
ECT − 0.0319218 − 1.62* − 0.0173745 − 0.64* − 0.0066962 − 1.02*

*** Indicates significant at the 1%, ** Indicates significant at the 5%, and * significant at the 10% level is shown.

Table 6
Long run estimates.
REC is the dependent variable

BRI CEE CWA

Vr. Coeff. Z- value Coeff. Z- value Coeff. Z- value

FDI 0.00046 5.05*** 0.000469 4.53*** − 0.00067 4.54***

GDP 69.4072 9.32*** 70.49162 8.27*** 37.2763 3.88***
TO 9.337392 9.35*** 7.38365 5.96*** 0.2729975 0.12
MEA SA SEA
FDI − 0.000156 − 1.67* 0.000183 2.44** − 0.000186 1.03
GDP − 217.8512 − 2.23** − 6.616565 − 0.46 − 6.296859 0.09*
TO 144.7503 3.17*** − 0.0926828 − 0.03 289.1478 1.10

*** Indicates significant at the 1%, ** Indicates significant at the 5%, and * significant at the 10% level is shown.

By holding all other variables fixed, a 1% rise in economic growth is associated with a 0.69% increase in renewable electricity
usage. These optimistic associations in BRI, CEE, and CWA countries are consistent with the results reported previously [96,97].
During 1980 and 1990, smaller unity coefficients indicated energy inefficiency in the labor-intensive industry [30,95]. Moreover, it
also provides indirect proof for the growth decomposition effect [98,99]. If the composition effect surpasses the scale effect, we
consider its efficiency in renewable electricity utilization, but in this study the composition effect falls belowunity, sp we believe it is
inefficient utilization of energy [100].
In the long term, there is a significant positive association among renewable electricity usage and trade openness in BRI, CEE, CWA,
MEA, and SEA countries. The outcome is in line with Shahbaz [62], Ang [105] and Jalil [106]. Tables 5 and 6 suggest that the

Table 7
Panel causality test.
BRI CEE

Null Hypothesis F-stats. Null Hypothesis F-stats.

FDI ⟹ REC 3.59643**, 0.86752 FDI ⟹ REC 3.07882**, 1.27086

TO ⇔ REC 2.99405**, 1.72601* TO ⟸ REC 0.14244, 6.53485***
TO ⇔ FDI 2.52607**, 3.34229** TO ⟹ FDI 2.31865*, 0.48056
GDP ⇔ FDI 2.53076***, 6.10853*** GDP ⇔ FDI 5.48939***, 7.62580***
GDP ⇔ TO 9.39103***, 1.97697* GDP ⟹ TO 17.6537**, 1.37246
SA MEA
FDI ⟹ REC 4.76965**, 3.76334 FDI ⟹ REC 3.89311**, 1.47166
TO ⟹ REC 4.64206**, 1.62144 TO ⇔ REC 1.75266*, 1.91873*
GDP ⟸ REC 1.83217, 6.95805*** GDP ⇔ REC 6.10769***, 2.46567**
TO ⟹ FDI 4.21653*, 3.14281 TO ⇔ FDI 3.25207**, 2.10426*
GDP ⟹ FDI 2.78363***, 0.79962 GDP ⟸ FDI 0.69798, 1.67518*
FDI ⟹ REC 4.76965**, 3.76334 GDP ⇔ TO 3.09386**, 6.00802***
CWE SEA
TO ⟸ FDI 0.42899, 2.66318** GDP ⟹ TO 1.76304*, 0.45094
TO ⟹ REC 4.36363***, 0.58681 TO ⟸ REC 0.52182, 2.03634*
GDP ⟸ FDI 0.51764, 0.69325* GDP ⟹ REC 3.38198**, 0.28384

***Indicates significant at the 1%, ** Indicates significant at the 5%, * significant at the 10% level is shown, ⇔ indicates bidirectional causality, and
⟹ indicates unidirectional causality.

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difference in results is due to different policies and economic situations in the region. Hence, ECT in all panel countries is negative and
significant, showing the model’s accuracy.

4.5. DH panel causality test

The DH panel causality test results shown in Table 7 revealed that trade openness and renewable electricity consumption have two-
way causality in BRI and MEA countries and unidirectional causality in CEE, CWA, SA, and SEA countries. Economic development and
renewable electricity intake have unidirectional causality among SEA and SA nations, while in MEA countries have bidirectional
causality. Results also reveal unidirectional causality among FDI and renewable electricity consumption in BRI, CEE, MEA, and SA
countries.

5. Discussion

This is essential to determining if the variables in this study are stationary before applying the panel cointegration test since
nonstationary data frequently provides erroneous regression findings. The same autoregressive parameter assumption and the
different autoregressive parameter assumption tests are two of the four primary types of panel unit root tests. In this study, four tests
are conducted: the Levin-Lin-Chu (LLC), Breitung t-stat, Im-Pesaran-Shin (IPS), and Phillip Perron (PP) tests. The LLC test is a widely
used method for testing the same assumption about an autoregressive parameter, while the IPS test is a well-liked method of testing an
assumption about an alternative assumption about an autoregressive parameter. It is apparent that although all variables are stationary
at the initial difference I(1), the majority of data series are nonstationary at level I(0). As a result, all of the variables included in this
study are stationary at the point of first difference I(1). The results of the Pedroni and kao co-integration tests are statistically sig­
nificant at 1% in BRI countries and their regions. As a result, both regionally and across panels, the findings of the panel cointegration
tests support the existence of cointegration links among the consumption of renewable electricity, trade openness, foreign direct in­
vestment, and economic growth. Panel PMG ARDL model represents short and long run results for BRI nations and their regions. When
compared to long-term connections, short-term relationships between variables are distinct. In CEE, SA, and CWA countries, as well as
the BRI nations as a whole, trade openness has positive and negative effects on the use of renewable power, but it has negative
consequences in MEA and SEA countries. The consumption of renewable power per capita will rise in the short term in BRI countries by
1.53%, 5.80% in CEE countries, 2.35% in CWA countries, and 0.60% in SA countries if trade openness grows by 1%. Though few
studies have focused on the connection between renewable energy and trade openness, the majority of them indicated that trade
openness had a favorable influence on the use of renewable energy [62, 105, 106], which was consistent with our findings. The
empirical findings of Alam et al. [61] and Azam et al. [63], who conducted research in Turkey and the OECD nations, respectively, are
comparable to the empirical results of the short-run negative association between economic growth and renewable electricity use.
Additionally, the short-term data indicate that in the BRI, MEA, and SEA nations, foreign direct investment has a negative influence on
the use of renewable power [66,90–93].
In terms of the long-term connection, the findings show that economic growth and trade openness greatly increase the consumption
of renewable power in BRI and CEE countries, but trade openness has the opposite impact in SA countries. The findings imply that
economic growth, foreign direct investment, and trade openness increase the long-term usage of renewable power in BRI nations. The
undeveloped economic sector in MEA, SA, and SEA nations might be the cause of the inverse relationship between economic growth
and renewable electricity use. For instance, low-quality entities and high production costs discourage investment in the infrastructure
and technology of renewable energy [31,35]. A major barrier to the expansion of renewable energy in BRI has been the ineffective
management of trade openness and foreign investments [44], and financial markets are ineffective in fostering the sector’s devel­
opment. The BRI nations’ collective usage of renewable power is positively impacted by economic growth. This is because outdated
technology is being used, which uses more power. On the one hand, more energy, particularly renewable energy, will be consumed
once a nation or area has achieved economic growth in order to maintain the rate of expansion. While on the other side, economic
expansion may lead to the development of new renewable energy technologies that will help the industry thrive.

6. Conclusion and policy implications

The above study looked at the strong connection among globalization, economic evolution and renewable electricity consumption
using the PMG ARDL approach in BRI countries and their regions during 2000–2020. Co-integration tests revealed long-run associ­
ations among selected variables. In the long term, there is a positive association among FDI and renewable power consumption, while
in the short run, there is a negative relationship for BRI nations. Such findings might be interpreted as FDI between nations increasing
renewable power consumption and improving it in the long run, but decreasing it in the near term owing to technological
advancement. Economic development is positively related to renewable electricity usage in the long term and negatively related in the
short term. Furthermore, In both the long and short run, trade openness is positively related. The results showed an increase in trade
demands for higher production of electricity.
The empirical findings of this study revealed a number of policy implications. Initially, it is essential to remember that attracting
globalization increases the industrial sector’s constant upgrading and modifies the economy’s structure, which can be helpful to curtail
energy consumption and expand environmental quality. Moreover, mutual efforts should be enhanced between domestic industries
and globalization related to energy. These findings recommend that globalization improves energy/electricity efficiency and pro­
ductivity and enhances the economies’ energy/electricity conservation concepts. The increase in globalization and economic growth

11
G. Tariq et al. Heliyon 9 (2023) e14635

significantly increases the renewable electricity consumption in BRI countries and their regions. In conclusion, we proposed that these
countries adopt sustainable energy-efficient technology instead of an erratic one, and the government must introduce the programs to
enhance the absorptive capacity of energy-intensive local firms. Investments in renewable energy projects should be encouraged while
using both equity and debt financing. A crucial method of luring financial resources into the renewable energy sector is through in­
ternational finance.
This study has significant limitations, such as the fact that further research may be done on the consumption of power at the
corporate level and on various sources of renewable energy.

Author contribution statement

Gulzara Tariq: Conceived and design the analysis; Wrote the paper.
Huaping Sun: Analyze and interpret the data.
Unai Fernandez-Gamiz: Analyze and interpret the data.
Sofia Mansoor: Contributed analysis of data.
Amjad Ali Pasha: Contributed analysis of data.
Sajjad Ali: Contributed analysis of data.
Muhammad Sohail Khan: Analyze and interpret the data.

Funding statement

Huaping SUN was supported by the National Social Science Fund of China [21AZD067], and the National Natural Science
Foundation of China (72243005).
Unai Fernandez-Gamiz was supported by the government of the Basque Country [ELKARTEK21/10 KK-2021/00014 & ELKAR­
TEK22/85 KK-2022/00043].

Data availability statement

Data will be made available on request.

Declaration of interest’s statement

The authors declare no competing interests.

Abbreviations

BRI Belt and Road Initiative

PMG Pooled Mean Group
ARDL Autoregressive distributed lag
FDI Foreign direct investment
GDP Gross domestic product
REC Renewable electricity consumption
TO Trade openness
LLC Levin, Lin and Chu
ADF Augmented dickey-fuller
PP Phillip perron
CEE Central and eastern europe
CWA Central and western asia
SA South asia
SEA South-east asia
MEA Middle east and africa
LPS Lm Pesaran and Shin

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