Does renewable energy promote economic growth? Fresh evidence from South Asian economies

Abstract

The present study investigates the effects of renewable energy, nonrenewable energy, and foreign direct investment (FDI) on output growth in the five South Asian economies. For this purpose, a panel growth model has developed over the period 1990–2018. Pedroni cointegration estimates indicate that renewable, nonrenewable energy, FDI, and gross domestic product (GDP) are cointegrated. The results from the panel fully modified ordinary least squares (FMOLS) depict the nonrenewable energy stimulates output growth. FDI also has a positive impact on output growth. Besides, the empirical results confirm that renewable energy has a significant and positive impact on output growth in the South Asian economies. The findings suggest that South Asian economies should investment in renewable energy for sustainable economic development.