Abstract:

This study explores the relationship between energy consumption, foreign direct investments and economic growth for the 1990-2018 period for the E-7 countries. Economic growth, defined by GDP per person, is defined as a function of DYY, commercial transparency, energy consumption, employment and capital formation. The selected Panel VAR analysis is suitable to analyze the transmission of units of special shocks and over time. According to the results of the GMM analysis for the 7 emerging countries, employment has increased economic growth, but trade transparency and non-clean capital formation have a negative impact on economic growth. When the relationship between energy consumption and foreign direct investments and economic growth is studied, energy consumption affects economic growth positively, while DYY affects economic growth negatively but is statistically unimportant. On the other hand, an increase in economic growth increases the DYY, Gcf and energy consumption. According to the Granger causality test, there is a one-way causality relationship from economic growth directly to foreign investments and energy consumption. Employment, non-clean capital formation and the increase in commercial transparency are also the cause of economic growth. Economic growth is the cause of employment, DYY, non-profit capital formation and energy consumption. On the other hand, when the causality relationship for foreign direct investments is examined, there is a double causality between non-clean capital formation, energy consumption and employment. From business transparency and economic growth to DYY, there is one-way reason. Finally, when the causality ratio for energy consumption is studied, there is a double-directional causality between all other variables except economic growth. Economic growth is the one-way cause of energy consumption. As a policy proposal, it is important that high economic growth continues in a stable way, as it will ensure that foreign direct investments come to the country. It is also important that energy consumption is connected to economic growth and that countries use energy-saving machines by supporting economic growth with innovative technologies to prevent environmental deterioration.

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