Nexus between energy consumption and economic growth: the comparison of non-renewable natural resource poor and rich countries

Abstract

The aim of this study is to determine the effects of renewable and non-renewable energy resources on economic growth in non-renewable natural resource poor and rich countries. For this purpose, a Cobb-Douglas production function is used by adding the energy source as an element of production from 1990 to 2012. In the models, the cointegration between resources and economic growth is tested by a panel cointegration technique. For long-term coefficient estimation, the panel autoregressive distributed lag (ARDL) test that is based on Pesaran et al. (1999) is used. According to the results of the pooled mean group (PMG), long-term and short-term results are consistent. Renewable resources have a relatively higher positive effect on economic growth in non-renewable natural resource rich countries. Moreover, these positive effects are higher in lower and upper middle-income countries (LMIC and UMIC) than in high-income countries (HIC). Our findings suggest LMIC and UMIC countries - especially in the group of non-renewable natural resource rich countries - value and consider the use of renewable energy resources for energy production decisions in their economic growth policies.