This study examines how outward foreign direct investment (OFDI) and green transitions have an asymmetric effect on green energy penetration (GEPN) among economies in the Global South between 2001 and 2022. The existing literature has investigated the environmental impacts of OFDI, there is minimal information regarding the effect of this phenomenon on the use of renewable energy, especially in developing countries, which are typified by poor institutions, dependence on fossil fuels, and inefficiencies in their structures. To address the gap, this study develops a new GEPN index of the relative efficiency of consumption of renewable energy to supply and use advanced panel quantile regressions of Method of Moments Quantile Regression (MMQR) and bootstrapped quantile regression (BSQR) as a robustness model to capture cross-sectional dependence, slope heterogeneity, and distributional asymmetries. The empirical results indicate that the OFDI contributes greatly to GEPN at larger quantiles, which can be attributed to the filter-out hypothesis, according to which the foreign investments in clean energy would be used to generate reverse technology spillovers and institutional learning within the origin countries. Industrial and agricultural development, on the other hand, does not have homogeneous negative impacts, meaning that structural dependence on fossil-based sectors negatively affects the adoption of green energy. Statistically, however, environmental technologies are statistically insignificant down the quantiles, indicating implementation bottlenecks and low absorptive capacity. The quality of governance continuously enhances GEPN, whereas the process of urbanization has a negative impact because of infrastructural facilities that are based on fossil fuels and consumption habits that are unsustainable. The results suggest that the scaling of green energy in the Global South needs to be based not only on the OFDI in the renewables but also on the alignment of industrial, urban, and agricultural policies with the green transitions. To transform the technological potential into reality in the form of real green energy gains, it is important to strengthen institutional quality and reform incentive structures. • OFDI promotes green energy penetration in higher-performing Global South economies • A new index measures efficiency of renewable energy use relative to supply • Strong governance amplifies the OFDI–green energy relationship • Industrial and agricultural growth constrain renewable energy penetration • Quantile analysis reveals heterogeneous policy and utility-sector effects
Bashir et al. (Fri,) studied this question.