ON THE RELATIONSHIP BETWEEN FOREIGN DIRECT INVESTMENT AND ENERGY CONSUMPTION: THE MEXICAN CASE

Abstract

This paper is aimed at analyzing the interrelation between Foreign Direct Investment (FDI) and Energy Consumption (EC) in Mexico during the period 1970-2014. To do that, we carry out a cointegration test and a Granger causality analysis. The empirical results from the cointegration test show a stable link between the growth rates of FDI and EC in the long run. While the results from Granger’s causality show that in the short run there is a unidirectional Granger causality from the growth rate of FDI toward the growth rate EC, while in the medium and long there is a bidirectional causality between the growth rates of FDI and LEC in Mexico during the period under study. Keywords : foreign direct investment, energy consumption, cointegration, Granger causality JEL Classifications: C32, F21, Q43. DOI: https://doi.org/10.32479/ijeep.10988