An assessment of the effect of gross capital formation and financial development on Renewable Energy Consumption in middle-income nations: Does FDI act as a boosting factor? Evidence from CS-ARDl and NARDL framework

The association between foreign direct investment (FDI), gross capital formation (GCF), financial development, and renewable energy usage is investigated in this research (REC). The research used the CS-ARDL and NARDL estimates to examine the correlation among REC, FDI, GCF, and financial development. The results demonstrate a strong and statistically valid positive correlation in both the immediate and prolonged periods. Whether innovation in FDI is favourable or bad, it may ultimately affect REC, either by accelerating or diminishing it. Additionally, the research emphasizes a substantial and statistically valid association between REC and GCF, demonstrating that domestic capital creation has a favourable effect on the incorporation of clean energy. Furthermore, the data demonstrates a noteworthy association between financial development and renewable energy certificates (RECs), suggesting that the financial incentivizes facilitated by financial development play a pivotal role in encouraging the widespread use of REC. The results shown in this research are consistent with prior scholarly works and have substantial ramifications for comprehending the intricate interplay of sustainable energy, foreign direct investment (FDI), gross capital formation (GCF), and financial growth. However, the research emphasizes the need to conduct a thorough assessment of the characteristics and quality of foreign direct investment (FDI) inflows. Furthermore, it emphasizes the need to promote equitable and sustainable development in the renewable energy industry while considering its impacts on society and the environment. In addition, the report highlights the possible social and environmental repercussions that may result from renewable energy initiatives sponsored locally. This underscores the importance of establishing resilient policy frameworks and efficient governance mechanisms to guarantee that financial development, foreign direct investment (FDI), and the Green Climate Fund (GCF) all contribute to fostering sustainable and equitable expansion in the utilization of renewable energy. As a result, the study's results provide significant contributions to the understanding of how to optimize the use of financial development, green climate funds (GCF), and foreign direct investment (FDI) in order to promote the adoption of renewable energy. But before formulating sustainable approaches to encourage the use of renewable energy, it is vital to do a thorough evaluation of the broader ramifications and associated variables.