Renewable energy and economic growth hypothesis: Evidence from N-11 countries

Abstract

In the recent years, the trend of environmental sustainability is rapidly increasing by adopting renewable energy resources. However, the main concern is that whether renewable energy consumption contributes to economic growth. To investigate the issue, this study analyzes renewable energy led economic growth hypothesis in the Next-11 economies over the period 1990–2020. Also, this study aims to examine the influence of industry value added, gross national expenditure, and trade openness on economic growth of these economies. Along with the second-generation panel unit root test, this study employed the non-parametric panel data approach, i.e., quantile method of moments regression. The estimated results reveal the slopes coefficients are heterogeneous and cross-sectional dependency is present in the panel. The non-parametric approach reveals that validity of renewable energy led growth hypothesis. Also, the industry value added, gross national expenditure, and trade openness are found positively affecting economic growth of these economies. The panel causality test gives indication of the two way causal association between the variables. Based on the obtained results, policy implications are also provided for governors and researchers.