Assessing the Effects of Renewable Energy and FDI on Economic Growth in Egypt

This study aims to examine the impact of renewable energy consumption and foreign direct investment (FDI) on Egypt’s economic performance. Given the role of FDI in stimulating GDP growth and facilitating the development of renewable energy technologies, it is essential to investigate the interrelationship among economic growth, FDI inflows, and green energy. The analysis employs annual data for Egypt covering the period from 1990 to 2021. Stationarity of the variables was assessed using unit root tests, and the autoregressive distributed lag (ARDL) approach was applied to evaluate both long-run and short-run relationships. To ensure robustness, the results were further validated using dynamic ordinary least squares (DOLS), fully modified ordinary least squares (FMOLS), and canonical cointegration regression (CCR) techniques. The ARDL findings indicate that a 1% increase in renewable energy consumption and FDI leads to a 1.02% and 1.87% rise in GDP, respectively, in the long run, as well as a 0.54% and 1.11% increase in the short run. These results highlight the importance of strengthening sustainable energy innovation, attracting higher-quality FDI, and promoting balanced and sustainable economic growth in Egypt.