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“Promoting Green Renewable Energy”: The need for Foreign
Direct Investment in Developing Countries
Anant Mishra
Former Youth Representative to United Nations
Email: anantmishra92@gmail.com
“We need affordable energy to help end poverty and to build shared prosperity. We
will also scale up efforts to improve energy efficiency and increase renewable
energy—according to countries’ needs and opportunities.”
Jim Yong Kim President of the World Bank Group
Introduction
With concerned thoughts from the developed world, renewable green energy is not
quite “green” for the developing world, not because it disturbs the economics of a
nation, because it requires more expenditure and suitable surroundings to deploy. Since
these criteria’s are not applied in most the cases, especially for the underdeveloped
regions in the planet. Speaking of a developing economy, small to medium scale energy
projects will mark the energy projects.
World Bank will play a very crucial role as it will help facilitate and empower this in a
way that were unavailable in the past enabling faster growth which will not hamper the
local markets and distort local lives. The World Bank has made it a mission, to bring in
needed resources in the area and evolve the area without affecting the resources. On
many occasions, the Bank along with its subsidiary organizations, including the United
Nations itself, have been associating with sovereign nations to protect the reduced
“natural resource debt” and diminished local economies which nations often ignore
while assisting large multi corporations. At times a negative image arises as
underdeveloped nations and most of the developing nations are given “conditions for
growth” from the multinational corporation which creates a hope of possible solutions
from outside rather than one inside. Thus World Bank should not be seen as an
organization with a job to intervene in sovereign affairs, instead it is a tool that is
available for everyone to flourish.
Speaking especially on Energy, this essential renewable source is at times considered as
a force for an international intervention. Energy plays a very important role in human
life and is on the top of the list of agenda’s for many governments. However the
availability of this “essential” resource has been a cause of conflicts for decades if not
centuries, with increasing potential sources at hand, it is might be possible for the world
to contain the tensions caused by the control of energy.
Green Renewable Energy in Developing Countries
Developing nations are already working their way to generate sustainable green. In the
early 2014, 95 developing nations had sustainable renewable support policy.
Comparing to the same situation of 2005, where only 15 nations were part of, this has
delighted the global nations as many experts believe this step to be a major
improvement. According to the IEA 2013 World Energy Outlook, by the end of 2015
renewable energy will become the second largest source of energy as the predicted
investments will rise to over 62% within the period of 2013 – 2035. As a matter of fact
investment in green energy has been increased significantly from 2011(I am only
talking about developing nations), however further growth is making the nations move
forward.
However these statements are quite contradictory to the basic realities of many
undeveloped and developing nations where one third (or more) of the entire population
are starting their lives without electricity and basic fuels for cooking, heating and
lighting. United Nations and other intergovernmental agencies estimated that almost 1
billion people will be without access to electricity in 2030, especially due to the rapid
growing population, mostly in sub-Saharan Africa and South Asia.
The expansion of global population also means increasing demands in renewable
energy. Renewable resources will play a major role in order to satisfy the increasing
demands as all other resources would then be to their maximum point. Fossil fuels will
continue to play a major role here; however possible improvements in increasing the
efficiency are quite uncertain, looking at the technological improvements today. The
emerging markets are the most that benefitting of all, as the markets crashed, it took
everything with it, but with steady levels of growth and stable economies, emerging
markets have many things to offer. Two of the BRICS nations, India and China are
leading this race, quite ahead than the developed economies such as the US. Emerging
nations such as BRICS nations are heavily dependent on renewable resource, learning a
lot from the developed nations, these (wanna be developed nations) nations are trying
to maintain a trend.
Those nations that have inadequate fossil fuel reserves and those that have still not
entered into industrialisation age for their development will rely even more on the
green technologies as they do not have the means to create or outsource an available
change. The possibility of importing gas and oil remains a doubt as such states lack both
the infrastructure and the means to deliver the product and are in no condition to
import the product. Additionally, the dependency of developing nations on their
imports will lead to dependency on the imports which would then lead to formation of
proxy countries that are hold hostage by power nations controlling their strategic
reserves. Renewable resources offer developing nations a sole sense of independency.
Nonetheless, even renewable resource can be abused to gain control over the foreign
nations, however it is quite unlikely that this situation would occur especially with nonrenewable.
Foreign Direct Investment
In the previous sections we understood the economical policy of green resources of
developing and developed countries and their impact on renewable energy resources.
We have also talked about how extensive role will these resources play in the
development of the nations, in the near future followed by the access to the
technologies which will determine growth. Foreign Direct Investment plays a very
crucial role in the process for building renewable capacities, looking through the eyes of
World Bank.
FDI is a type of investment where relations between the two nations are tested; one
nation with stable developed economy invests in other nation’s economy or markets not
only to bring stability in the hosts markets but to bring over all growth and
development. The long lasting relationship with the investor is the total outcome as
local enterprise and other decree investors lead the entire game of demand and supply.
FDI not only ensures the information or the knowledge of the capita income, it gets
massive support from the broad enterprises.
FDI’s are the best for quick development and growth within the host nations as they are
equipped with capital and basic know how of the infrastructure particularly with the
industrial segment in mind. With the fact that industrial and industry segments are on
the long run especially when the investments are made into renewable energy sources
and renewable energy commitment with the partners FDI are suitable tool for
development sectors. As a matter of fact, FDI was recorded highest in the year 2011
where all the sectors reached a height of 19.9%.
The World Bank itself is an instigator of FDI’s, and within its dimensions, it has the
ability to create a structure that to help developing states achieve the requirements of
renewable energy projects. On many occasions the Bank itself can act as a major global
investor in the region. Unlike other corporations, the World Bank ability to fund is
strictly limited. “There’re many possible approaches for policy to be implemented, but
the goal is to achieve even greater expansion of FDIs into green energy.”
Conclusion
Green renewable energy is the most sustainable source of energy for economic
development for the future generations. Developing nations, especially those that are
going through a rough transition period industrialization should aggressively increase
the renewable presence in their energy portfolios’ as the majority of the governments
focus on this area. With depleting natural resources, renewable sources of energy are
the next answer to satisfy the increasing demands from our world population. Failure to
achieve this will result in severe disparities and poverty increase in many nations.
Hence, the World Bank is one of the leading financial institutions in the world
established to combat issues like these; hence it must employ a policy to ensure steady
and safe development for energy infrastructure for the future generations.
Foot Links
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Nee, Victor, Raymond Liedka. “Markets and inequality in the transition from state
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Pablo Beramendi and Christopher Anderson. Russel Sage Foundation. 2008.
New Europe Online. (2014, February 20). http://www.neurope.eu. Retrieved from
NEOnline: http://www.neurope.eu/article/un-calls-action-against-inequality-0
Stiglitz, Joseph. Joseph Stiglitz and the World Bank: The Rebel Within. Wimbledon
Publishing Company. London. 2001.
Stiglitz, Joseph. The Price of Inequality: How today’s divided Society Endangers our
Future. W.W. Norton and Company. New York. 2012.
UN Department of Economics and Social Affairs. Inequality Matters: Report of the World
Social Situation 2013. UN Secretariat. New York. 2013.
About the Author
Anant Mishra is a former Youth Representative to United Nations.
He has served in numerous committees including United Nations
General Assembly (UNGA), Economic and Social Council
(ECOSOC) and United Nations Security Council (UNSC).He is an
Organising Committee Member of Global Economic Summit.