Abstract
The consumption of renewable energy has become a substitute for fossil fuels to mitigate environmental degradation. However, this substitution of energy raises many questions regarding its possible impact on economic growth. In this context, this research aims to examine the long-term relationship between economic growth and financial development, non-renewable energy, renewable energy, and human capital in 16 Latin American countries. Panel data techniques during the period 1988–2018 and statistical information compiled by the World Bank and Penn Word Table databases were used. Second-generation econometric techniques (cross-sectionally augmented Dickey–Fuller (CADF) and cross-sectionally augmented IPS (CIPS) were used in the work methodology, which allow the presence of cross-sectional dependence between sections to be controlled. The main results indicate that there is a long-term equilibrium relationship between financial development, non-renewable energy consumption, renewable energy consumption, human capital, and economic growth. The results show that the consumption of renewable energy does not compromise economic growth; the 1% increase in renewable energy consumption is related to the 1% increase in economic growth. The policy implications suggest some measures to ensure economic growth considering the role of green energy and human capital.
Highlights
The World Economic Outlook report developed by the World Bank [1] indicates that the world economy showed the worst performance since World War II, which, according to its forecasts, will have declined by 5.2% by 2020
As for Latin America, the report based on the preliminary balance of the economies of Latin America and the Caribbean developed by the Economic Commission for Latin America and the Caribbean (ECLAC) [2] mentions that between the years 2014 and 2019, there was a low economic growth of 0.3% and for the year 2020, a decrease of 7.7% is expected
This study aims to contribute to the scientific field with tools that contribute to the discussion on the determinants of economic growth, which is why this study analysed the relationship between financial development, non-renewable energy consumption, renewable energy consumption, and capital human growth with economic growth for 16 Latin American countries, during the period 1988–2018, through econometric techniques of panel data based on cointegration and causality
Summary
The World Economic Outlook report developed by the World Bank [1] indicates that the world economy showed the worst performance since World War II, which, according to its forecasts, will have declined by 5.2% by 2020. The literature emphasises that financial services are the main engine of economic growth, being important for innovation and productive investment [5] Studies such as Boukhatem and Ben [6], Ali et al [7], and Pradhan et al [8] prove that financial development contributes positively to economic growth, indicating that finances help improve families’ standard of living. Another line of studies indicates that the consumption of non-renewable energy is a key input for economies worldwide since it plays a major role in the level of production and holds a key place in consumer spending [9]. There is strong evidence suggesting that human capital accumulation has a beneficial effect on long-term economic growth [3,15]
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
