Revisiting the Linkage Between Economic Advancement, FDI, Renewable Energy, Environmental Goods, and the Load Capacity Factor

Although several extant studies have addressed interrelationships between economic advancements, foreign direct investment (FDI), renewable energy (REN), and environmental goods (ENGs), using a wide range of empirical approaches, no existing study has yet explored their connection under the necessary condition approach (NCA). Also, no existing study has jointly examined the aforementioned variables for the specific case of Russia, given that the country is one of the major oil-exporting countries globally. The present study, therefore, addresses this research gap by examining the necessary conditions under which economic advancement, FDI, REN, and ENGs influence environmental quality via the load capacity factor (LCF). For this reason, the study applied the panel dynamic ordinary least square (DOLS), fully modified ordinary least square (FMOLS), canonical cointegration regression (CCR), and the Prais–Winsten regression approaches in addition to the NCA to scrutinize four necessary conditions on a data set ranging from 1994 to 2022. The NCA suggests that economic growth, FDIs, REN, and ENGs all meet the necessary conditions to mitigate environmental destruction in Russia. Furthermore, the result shows that REN is necessary for low levels of LCF ≥ 40, economic growth is necessary for LCF = 100, FDI is necessary for LCF ≥ 50, and ENGs are necessary for LCF ≥ 80. To the best of our knowledge, this is the first study in this subject area to apply the NCA to enable a more in-depth analysis of the suggested nexus.