Towards a gradual transition to renewable energies in Tunisia: Do foreign direct investments and information and communication technologies matter?

Abstract

This paper scrutinizes the interrelationships among renewable energies, foreign direct investments (FDI), information and communication technologies (ICT), trade openness, and total factor productivity (TFP) in the context of Tunisia from 1984 to 2019. For that reason, we empirically use the autoregressive distributed lag model (ARDL) with breakpoint. The results of this study reveal the prominent contribution of FDI and TFP in the sustainable energy transition. Therefore, the diffusion of renewable energies should no longer be done only by the government but the private sector should take part in this transition by encouraging FDI. However, our results reveal that trade and ICT inhibit the process of transition to renewable energies in Tunisia. This fact may be explained by the economic recession, bad governance, and political instability which have delayed the implementation of new technologies in vital sectors of the economy, specifically the energy sector. On the other hand, applying a test of causality in the frequency domain has confirmed the presence of one-way causal relations from clean energy to ICT in the long term and from clean energy to FDI in the short and medium term. In addition, there is a bi-directional causal association between TFP and sustainable energy in the long term. Finally, the occurrence of causality from trade to sustainable energies was confirmed.