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The Impact of Renewable Energy Investment on Economic Growth

Author

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  • Harith Hadi Mohammed Al-Darraji

    (Ph.D. candidate, School of Business -Business Economics Department, University of Jordan, Jordan Author-Orchid id: http://orcid.org/0000-0002-1015-9774)

  • Amir Bakir

    (Associate Professor, School of Business -Business Economics Department, University of Jordan, Amman, Jordan Author-Orchid id: http://orcid.org/0000-0001-8919-5550)

Abstract

The study aimed to define and assess the impact of renewable energy on economic growth. This included the use of panel data for 18 different countries during the period of 2008-2015. The FMOLS econometric technicality was used to estimate the relevant relations between the independent variables, namely; renewable energy, capital, labor and trade openness and the dependent variable, real GDP per capita. The study found that renewable energy affects economic growth positively, however, the elasticity was highly inelastic. Also, the study found positive and significant relationships between economic growth and the other three independent variables with inelastic elasticities. The study concluded that countries should be encouraged to invest in renewable energy and gradually decrease their dependence on conventional energy. Furthermore, it highly recommended to remove all obstacles facing the development of renewable energy.

Suggested Citation

  • Harith Hadi Mohammed Al-Darraji & Amir Bakir, 2020. "The Impact of Renewable Energy Investment on Economic Growth," Journal of Social Sciences (COES&RJ-JSS), , vol. 9(2), pages 234-248, April.
    • Handle: RePEc:jso:coejss:v:9:y:2020:i:2:p:234-248
    DOI: 10.25255/jss.2020.9.2.234.248
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    References listed on IDEAS

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    2. Ellabban, Omar & Abu-Rub, Haitham & Blaabjerg, Frede, 2014. "Renewable energy resources: Current status, future prospects and their enabling technology," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 748-764.
    3. Daniel Ştefan Armeanu & Georgeta Vintilă & Ştefan Cristian Gherghina, 2017. "Does Renewable Energy Drive Sustainable Economic Growth? Multivariate Panel Data Evidence for EU-28 Countries," Energies, MDPI, vol. 10(3), pages 1-21, March.
    4. Marius-Corneliu Marinaș & Marin Dinu & Aura-Gabriela Socol & Cristian Socol, 2018. "Renewable energy consumption and economic growth. Causality relationship in Central and Eastern European countries," PLOS ONE, Public Library of Science, vol. 13(10), pages 1-29, October.
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    Cited by:

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    2. Arif, Asma & Minh Vu, Hieu & Cong, Ma & Hon Wei, Leow & Islam, Md. Monirul & Niedbała, Gniewko, 2022. "Natural resources commodity prices volatility and economic performance: Evaluating the role of green finance," Resources Policy, Elsevier, vol. 76(C).
    3. Lin, Renzao & Wang, Zhe & Gao, Chunjiao, 2023. "Re-examining resources taxes and sustainable financial expansion: An empirical evidence of novel panel methods for China's provincial data," Resources Policy, Elsevier, vol. 80(C).

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