Abstract
Renewable energy has attracted researcher attention in recent years, and the number of studies conducted on the topic has increased. The importance of renewable energy has increased because certain energy resources are exhaustible and they damage the environment in various ways. Fossil fuel-based energy is the main culprit for environmental damage and lately renewable energy is the main focus as a safe alternative to fossil fuels. However, replacement of fossil fuels by renewables may have a negative impact on human development, even if it has a positive impact on the environment. With this rationale, this study investigates the relationship between renewable energy and human development in 28 OECD (Organization for Economic Cooperation and Development) countries from 1990 to 2017 by using the Westerlund and Edgerton panel cointegration test with structural breaks and the Dumitrescu and Hurlin causality test. The results of the panel data analysis revealed that renewable energy affected human development positively. In addition, the causality test determined the presence of a bidirectional causality relationship between renewable energy and human development. This study is unique in the sense that it is the only study in the literature examining the relationship between human development index and renewable energy for the countries in question. While similar analyses were conducted in the past for different regions or for just one type of renewable energy, no such study has been conducted in this scale with this method. Another differentiating feature of the study is that it demonstrates the bidirectional nature of the study not just the unidirectional causality. Policymakers are advised to invest in renewable energy projects and also create frameworks which provide incentives to the private sector for renewable energy production.
Highlights
Across the globe, renewable energy resources have gained importance recently due to the risk of depleting energy resources and the damage that the resources inflict on the environment
In particular this study investigates the relationship between renewable energy and human development in 28 OECD countries in the period from 1990 to 2017
The number of research studies on alternative energy resources has increased recently, due to the risk of energy resource depletion and the damage that fossil fuels inflict on the environment
Summary
Renewable energy resources have gained importance recently due to the risk of depleting energy resources and the damage that the resources inflict on the environment. In addition to affecting factors such as environment and human health, renewable energy resources could affect the growth and development of countries. Energy is the heart of human development, and it increases productivity by accelerating social improvement. Communities, and countries directly in terms of economic growth, health, safety, environment, education, and employment [6]. Tokgoz et al [10] cite some research that blame the 2007–2008 food price increases on increased bioethanol use in the US. Other researchers have shown that long term food price increases are caused in general by increases in crude oil prices, demand-supply relations in agricultural markets and changes in exchange rates, while the production and use of biofuels is a minor factor [11]
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