Investors' perspective on determinants of foreign direct investment in wind and solar energy in developing economies – Review and expert opinions

Alexander Ryota Keeley, Ken'ichi Matsumoto

Research output: Contribution to journalArticlepeer-review

59 Citations (Scopus)


Foreign direct investment (FDI) in renewable energy projects in 2015 has reached more than 10% of the total green-field FDI worldwide, and developing economies were increasingly at the forefront of these investments. However, there are few studies that focus on the FDI in this emerging sector. Understanding determinants behind the location decisions of the FDI would lead to creating a better investment climate and further facilitate worldwide deployment of renewable energy technologies. Thus, this paper identifies the determinants of FDI in wind and solar energy in developing economies based on a literature review and semi-structured interviews. Factors that are identified through the literature review are categorized into the following categories: institutional environment, macroeconomic environment, natural conditions, and renewable energy policies. Semi-structured interviews were conducted with experts from multinational corporations that are active in FDI in wind and solar energy. Based on these interviews, 18 factors that could be considered as important determinants are selected and presented along with expert opinions. The experts' opinions suggest strong importance of renewable energy policies when compared to traditionally argued determinants of FDI including macroeconomic environment, institutional environment and natural conditions. Among traditionally argued determinants, exchange rate stability is suggested to be one of the most important factors considering the positioning of investments in solar and wind energy in most of the companies’ investment portfolios.

Original languageEnglish
Pages (from-to)132-142
Number of pages11
JournalJournal of Cleaner Production
Publication statusPublished - Apr 1 2018
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Renewable Energy, Sustainability and the Environment
  • General Environmental Science
  • Strategy and Management
  • Industrial and Manufacturing Engineering


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