Renewable Energy Consumption and Economic Growth Relationship in Developing Countries

Abstract

Renewable energy is typically characterized as energy produced from solar, wind, geothermal, tide and wave, wood, waste, and biomass sources. Renewable energy is a crucial issue since it is a clean energy source with less environmental impact. This study aims to use panel methodologies to investigate the relationship between the use of renewable energy and economic growth in developing countries for the years 1990 to 2019. Panel unit root test was performed for the stationarity of the series. After this stage, panel cointegration tests were performed and a long run relationship for renewable energy consumption and economic growth was detected according to the Pedroni test. For the direction of causality, panel causality test was performed, and test results showed unidirectional relationship from economic growth to renewable energy consumption. Growth increases renewable energy consumption and reduces carbon emissions. The direction of causality suggests that conservation hypothesis is valid for developing countries.