Role of economic complexity to induce renewable energy: contextual evidence from G7 and E7 countries

Abstract

ABSTRACT The prime objective of this article is to examine the heterogeneous impacts of economic complexity on renewable energy demand within a panel of G7 and E7 countries. One of the important contributions of this research is to explore the role of overall structural change and economic factors for renewable and cleaner energy in developed and emerging economies. The existing literature points to scant research about the impacts of economic complexity on energy transformation and renewable energy adoption. During recent years, the G7 and E7 countries have encountered enormous competition in manufacturing and industrialization and are also experiencing global pressure from both climate change and Sustainable Development Goals (SDGs) for the promotion of renewable energy infrastructure. Taking into consideration the heterogeneity of issues, the authors apply the Westerlund cointegration and heterogeneous panel data techniques (FGLS, system GMM, FMOLS, and DOLS) for an in-depth, empirical analysis. Interestingly, empirical findings indicate that economic complexity affects renewable energy demand from G7 and E7 countries. This paper documents that economic complexity is a policy factor for overall energy transformation and greener energy demand. This study recommends that complexity and structural change policies should be observed for cleaner and greener growth and overall greener energy promotion.