Foreign direct investment, renewable energy transition, and social-economic impacts: evidence from panel cointegration and causality analysis

This study empirically investigates the dynamic interrelationships among Foreign Direct Investment (FDI), renewable energy consumption, and economic growth within the West African sub-region, a context characterized by distinct energy infrastructure deficits and ambitious development goals. Motivated by the critical need to reconcile capital inflows with sustainable development trajectories, the research utilizes panel data spanning recent decades to examine whether foreign capital acts as a catalyst for green energy transition or merely fuels conventional industrial growth. By employing advanced econometric techniques to test for cointegration and causality, the analysis reveals that while FDI significantly drives economic growth through capital accumulation and technology transfer, its impact on renewable energy consumption remains complex and non-linear. The findings suggest that although FDI contributes to the expansion of the energy sector, the "pollution haven" hypothesis may still hold relevance in certain contexts where investment flows are directed toward extractive or carbon-intensive industries rather than renewable infrastructure. Furthermore, the study identifies a bidirectional causal link between economic growth and renewable energy consumption, indicating that energy security is both a prerequisite for and a consequence of development. Consequently, the research concludes that attracting FDI alone is insufficient for sustainable outcomes; rather, West African policymakers must implement targeted regulatory frameworks and "green" investment incentives to ensure that foreign capital effectively bridges the technological gap and fosters a transition toward a low-carbon economy. • Evaluates hybrid renewable energy systems for HRS in Muscat, Oman. • PV-WT-B configuration is the most cost-effective for green hydrogen production. • PV-WT-B design includes 1000 kW solar, 660 kW wind, and 500 kW electrolyzer. • Achieves 1000 kg H 2 /day for fuel cell buses with low LCOE and LCOH. • Provides guidance for renewable hydrogen infrastructure in sunny, windy regions.