Dynamics of International Direct Investment in Renewable Energy and Structural Transformation in MENA Countries: Standard Evidence Using System-GMM Models and Threshold Regression (2005-2023)

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Original abstract

This research aims to measure the impact of international direct investment directed to the renewable energy sector(FDI_RE) and the possibilities of structural transformation of emerging economies, and identify the special determinants that attract this type of investment, while testing the existence of a non-linear relationship between FDI_RE and structural transformation, the research relied on a mixed methodology that combines descriptive and Standard analysis using (Panel Data) for 12 countries from the Middle East and North Africa during the period (2005-2023 ) and then estimate three main standard models( generalized dynamic(system- GMM ) to estimate the determinants(FDI_RE) and the self-regression model of distributed data slowdowns (panel ARDL-PMG ) to measure the long-term and short-term relationship, and the threshold regression model for Data( Panel Threshold Regression ) to test non-linearity the results showed that the determinants of FDI in renewable energy are fundamentally different from traditional FDI determinants, as environmental policies and sustainable development goals came as the most attractive factors, superior to the market size and structure traditional infrastructure ، It was also proved that there is a long-term joint integration relationship between (FDI_RE) and structural transformation, with an elasticity coefficient of (0.437) in the long term, and most importantly, a non-linear relationship was discovered in the form of the letter S, where the impact of (FDI_RE) is not statistically significant as the ratio of its flows to GDP reaches a critical threshold of (1.83%), and after exceeding this threshold, the impact multiplies significantly coefficient( 0.712) the flexibility of structural transformation increases by( 67% ) in countries with strong institutions compared to countries with weak institutions, and this research is the first of its kind in the MENA region, which combines the analysis of fdi_re determinants and measurement of For the first time, it provides quantifiable quantitative results that policy makers can use to design strategies to attract green investment.

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