Exploring the role of biomass energy consumption, ecological footprint through FDI and technological innovation in B&R economies: A simultaneous equation approach

Foreign direct investment can be a way to promote modern energy-efficient technology in Belt & Road countries, and this aspect has yet to be explored. Therefore, we set three simultaneous equations to determine the role of foreign direct investment inflow, technological innovations, natural resources, population density on biomass energy consumption, and ecological footprint. We applied a novel panel algorithm, cross-sectionally augmented Autoregressive Distributed Lags, and Driscoll & Kraay methods for 52 Belt & Road panel countries from 1992 to 2017, which provides a more robust analysis by controlling spatial dependency and heterogeneity. The empirical results depict that biomass energy consumption improves the environment of the Belt & Road region, as ecological footprint and biomass energy consumption yielded a negative relationship. However, FDI supports the 'Pollution Haven' hypothesis for the Belt & Road economies. The results further infer that the ecological footprint can be lowered in the economies by technological advancement. From the policy perspective, our findings suggest that policymakers in Belt & Road economies should devise comprehensive foreign investment and modern biomass energy policies aiming at cleaner industrial practices that ensure environmental sustainability.(c) 2021 Elsevier Ltd. All rights reserved.

Automated summary

This study explores the impact of foreign direct investment on biomass energy consumption and ecological footprint in the Belt & Road region. The results show that biomass energy consumption improves the environment in the region, but foreign direct investment has a negative impact on the environment of Belt & Road economies. Additionally, the results suggest that technological advancement can reduce the ecological footprint of economies.