Munich Personal RePEc Archive

¬¬¬¬¬¬From Nonrenewable to Renewable Energy and Its Impact on Economic Growth: Silver Line of Research & Development Expenditures in APEC Countries

Zafar, Muhammad Wasif and Shahbaz, Muhammad and Hou, Fujun and Sinha, Avik (2018): ¬¬¬¬¬¬From Nonrenewable to Renewable Energy and Its Impact on Economic Growth: Silver Line of Research & Development Expenditures in APEC Countries.

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Abstract

This study disaggregates energy, i.e. non-renewable and renewable energy consumption, and investigates its effect on economic growth. The time period of 1990-2015 is used to examine Asia Pacific Economic Cooperation (APEC) countries. This paper determines the cross-sectional dependence and employs a second-generation panel unit root test for precise estimation. The Pedroni and Westerlund cointegration tests are used to examine the long-run equilibrium relationship between the variables and confirm the presence of cointegration in the long run. The FMOLS and DOLS approaches are applied to investigate long-term output elasticities between the variables. The results show the stimulating role of energy (renewable and nonrenewable) consumption in economic growth. Research and development expenditures and trade openness have a positive effect on economic growth. Moreover, the time series individual country analysis also confirms that renewable energy has a positive impact on economic growth. The Granger causality analysis reveals the unidirectional causal relationship running from renewable energy consumption to economic growth and economic growth to non-renewable energy. This empirical evidence suggests that countries should increase investment in renewable energy sectors and plan for development in renewable energy for sustainable energy growth.

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