Does renewable energy consumption promote economic growth? An empirical analysis of panel threshold based on 54 African countries

Abstract

PurposeThe purpose of this study is to investigate the relationship between renewable energy consumption and economic growth, using the threshold variables of non-renewable energy consumption, urbanization level and per-capita income.Design/methodology/approachThis study used a panel threshold regression model, on combined African countries and divided African countries into five regions (northern, western, central, southern and eastern Africa). The study used panel data from 54 African countries, from 1990 to 2018.FindingsThis study established a threshold interval where the significant negative impact of renewable energy consumption on the economic growth of combined African countries is different at each split asymmetric phase, meaning the relationship is negative and non-linear. Further, the study established the threshold effect of divided African countries into regions, revealed a negative effect of renewable energy consumption on economic growth and compared the differences of threshold effect and coefficient in the regions, which further highlight the varying resource and renewable energy development across African countries.Practical implicationsThis study recommends strategies and investment priorities on energy transition, through optimizing renewable energy in Africa, hence aggressive investment in the renewable energy sector is highly encouraged especially for the oil-producing state to promote clean and sustainable energy.Originality/valueThe contribution of this study is the establishment of a non-linear panel threshold model to examine the asymmetric effect of renewable energy consumption on economic growth which to the best of the authors’ knowledge is pioneer research in Africa. Additionally, an in-depth analysis of renewable energy consumption’s effect on the economic growth of all the regions in Africa.