The Impact of Renewable Energy Investment on Economic Growth
Keywords:economic growth, renewable energy, GDP per capita, FMOLS, capital, labor, trade openness
The study aimed to define and assess the impact of renewable energy on economic growth. It used panel data for 18 countries during the period 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. Also, it highly recommended to remove all obstacles facing the development of renewable energy.
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