Does energy conversion contribute to economic development in emerging and growth leading economies (EAGLE's): evidence from panel ARDL approach.

Abstract

Energy is an essential indication of productivity, usage, and nation-building in the development context. However, energy diversity that emphasizes renewables is still vital for economic development in emerging nations. This study examines the impact of renewable energy on economic development in emerging and growth-leading economies (EAGLE's) from 1980 to 2019. The econometric procedure used in this study is pooled mean group regression/Panel ARDL approach. The study's results support the growth-conservation theory and demonstrate that wealth creation is not dependent entirely on fossil fuels and that other energy sources may also be used. There is a positive association between renewable energy production and consumption and economic development in EAGLE countries. For the overall sample selected, the association between the long run and short is positive and significant, whereas individual analysis for each country provided mixed results. In the short run, the association between renewable energy consumption and economic development for Bangladesh, India, Indonesia, Mexico, and Philippines is negative. While in production, most countries showed positive and significant results except Brazil, Indonesia, Mexico, and Russia. The result of this study will help policy makers from the selected countries towards the use of renewable energy production and consumption, its importance and contribution to the economic development of these countries. However, some countries showed a negative relationship particularly Russian economy is rich in natural resources (oil, natural gas). While the remaining countries that showed negative relationship have number of problems associated with renewable energy consumption and production. This study refers the attention of policy makers from developing countries to consider the potential impact of renewable energy for the economic development. Energy transition can also contribute to the environmental protection and the reduction of greenhouse gases.