The Impact of Financial Development and FDI on Renewable Energy in the UAE: A Path towards Sustainable Development

Abstract

Several empirical studies have explored the influence of financial development on energy consumption; however, the impact of financial development, economic growth, and FDI on renewable energy consumption (REC) has not been studied in the case of the UAE. For this purpose, the long and short-run interactions among economic growth, FDI, financial development, and renewable energy consumption are explored by applying the new technique of bootstrap autoregressive distributed lag, along with Granger causality analysis, in the context of the UAE for the period from 1989–2019. Using estimation techniques, the study reveals the main findings and implications for policymakers in the UAE. The present research provides significant empirical evidence that financial development, FDI, and economic growth can significantly increase renewable energy consumption in the UAE. Therefore, it is essential to promote financial development in the UAE in order to avert the financial risks that undermine the stability of the financial markets and that negatively affect the REC. Furthermore, policymakers in the UAE should promote the concept of green finance and should provide more funds for investments in green energy for sustainable energy development in the UAE.