Renewable electricity generation and economic growth nexus in developing countries: An ARDL approach

Abstract

This study examines the short- and long-run of the causal correlation between economic growth (G.R.) and renewable electricity generation sources for a panel of 25 developing nations over the period 1990–2017. To do so, second-generation cross-sectional dependence (C.D.) test Im, K.S., Pesaran and Augmented Dickey-Fuller panel unit root test, panel cointegration, autoregressive distributed lag in view of the pooled mean group estimation and panel heterogeneous Dumitrescu Hurlin (2012) causality methods are utilised. The main findings indicate that the positive and significant impact of renewable electricity generation on G.R. shows that renewable electricity generation sources stimulate G.R. in the long run for these selected countries. It is also demonstrated that there is bidirectional causality between renewable electricity generation and G.R. both in the short run and long run. Based on our findings, the feedback hypothesis is valid for developing countries.