What drives energy efficiency? New evidence from financial crises

Using a sample of 100 countries from 1980 to 2015, this paper investigates the impact of Foreign Direct Investment (FDI), imports, gross capital formation, and industry value-added on energy efficiency before and after the 2008 global financial crisis. Our findings reveal that failing to control for economic downturns may lead to misleading results. Moreover, we find that the effects of these channels are different between low, middle and high-income countries. Our study also shows that the effect of FDI on energy savings is inverted U-shaped whereas the effect of imports on energy savings is U-shaped when we control for the income level of the countries.