Governance and modern renewable energy consumption in the East African Community (EAC): a dynamic panel CS-ARDL approach

Abstract

PurposeThis study aims to examine the effect of governance on the consumption of modern renewable energy in the East African Community (EAC), controlling for economic growth, trade openness and foreign direct investment (FDI).Design/methodology/approachThe study relied on secondary data sourced from the World Development Indicators, World Governance Indicators and the International Energy Agency (IEA) for the EAC from 1996 to 2019. A panel Cross-Sectional Augmented Distributed Lag (CS-ARDL) model and second-generation panel data models were employed in the analysis.FindingsThe findings indicate that poor governance and inadequate FDI are significantly responsible for the low level of modern renewable energy consumption (MREC) in the EAC. On the other hand, trade openness significantly enhances MREC, while GDP per capita has no significant effect on MREC.Originality/valueThe consumption of modern renewable energy sources (excluding the traditional use of biomass) and its determinants, as most studies focus on renewable energy consumption as a whole. The study also employed the panel CS-ARDL model and second-generation panel data models.