The relationship between renewable energy sources and sustainable economic growth: evidence from SAARC countries

Environmental Science and Pollution Research (2021)Cite this article

Abstract

The purpose of this study is to examine the relationship between renewable energy sources and sustainable economic growth of the South Asian Association for Regional Cooperation (SAARC) countries. This study uses three main renewable energy sources such as geothermal, hydro and wind. This study collects dataset from SAARC countries from 1995 to 2018. This study applies a fixed-effect test and panel vector error correction model (PVECM) test for data analysis. The overall results show that all three renewable energy sources have positively significant impacts on economic development among SAARC countries’ economies. Moreover, the hydropower renewable energy source has more effects and influences on economic growth as relatively compared with the rest of the two individual sources of renewable energy.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

US$ 39.95

Tax calculation will be finalised during checkout.

Data availability

The data is available on request from corresponding author.

References

  1. Abakah EM (1993) Are view of economic growth and energy consumption in a developing country: Ghana. OPEC Energy Rev 17(1):47–61

    Article  Google Scholar 

  2. Al-Mulali U, Fereidouni HG, Lee JY, Sab CNBC (2013) Examining the bi-directional long run relationship between renewable energy consumption and GDP growth. Renew Sust Energ Rev 22:209–222

    Article  Google Scholar 

  3. Alper A, Oguz O (2016) The role of renewable energy consumption in economic growth: evidence from asymmetric causality. Renew Sust Energ Rev 60:953–959

    Article  Google Scholar 

  4. Amri F (2017) Intercourse across economic growth, trade and renewable energy consumption in developing and developed countries. Renew Sust Energ Rev 69:527–534

    Article  Google Scholar 

  5. Apergis N, Payne JE (2010) Renewable energy consumption and economic growth: evidence from a panel of OECD countries. Energy Policy 38:656–660

    Article  Google Scholar 

  6. Apergis N, Payne JE (2011) The renewable energy consumption-growth nexus in Central America. Appl Energy 88:343–347

    Article  Google Scholar 

  7. Apergis N, Payne JE (2012) Renewable and non-renewable energy consumption-growth nexus: evidence from a panel error correction model. Energy Econ 34:733–738

    Article  Google Scholar 

  8. Apergis N, Chang T, Gupta R, Ziramba E (2016) Hydroelectricity consumption and economic growth nexus: evidence from a panel of ten largest hydroelectricity consumers. Renew Sust Energ Rev 62:318–325

    Article  Google Scholar 

  9. Armeanu DŞ, Vintilă G, Gherghina ŞC (2017) Does renewable energy drive sustainable economic growth? multivariate panel data evidence for EU-28 countries. Energies 10(3):381

  10. Babusiaux D, Pierru A (2001) Capital budgeting, investment project valuation and financing mix: methodological proposals. Eur J Oper Res 135(2):326–337

    Article  Google Scholar 

  11. Barney F, Franzi P (2002) The future of energy from future dilemmas: options to 2050 for Australia’s population, technology, resources and environment. CSIRO Sustain Ecosyst:157–189

  12. Beça P, Santos R (2010) Measuring sustainable welfare: a new approach to the isew. Ecol Econ 69:810–819

    Article  Google Scholar 

  13. Bhattacharya M, Paramati SR, Ozturk I, Bhattacharya S (2016) The effect of renewable energy consumption on economic growth: evidence from top 38 countries. Appl Energy 162:733–741

    Article  Google Scholar 

  14. Bildirici M, Gokmenoglu SM (2017) Environmental pollution, hydropower energy consumption and economic growth: evidence from G7 countries. Renew Sust Energ Rev 75:68–85

    Article  Google Scholar 

  15. Bilgili F, Ozturk I (2015) Biomass energy and economic growth nexus in G7 countries: evidence from dynamic panel data. Renew Sust Energ Rev 49:132–138

    Article  Google Scholar 

  16. Bilgili F, Kuskaya S, Toguc N, Mugaloglu E, Kocak E, Bulut U et al (2019) A revisited renewable consumption-growth nexus: a continuous wavelet approach through disaggregated data. Renew Sust Energ Rev 107:1–19

    Article  Google Scholar 

  17. Bulut U, Inglesi-Lotz R (2019) Which type of energy drove industrial growth in the US from 2000 to 2018? Energy Rep 5:425–430

    Article  Google Scholar 

  18. Chontanawat J, Hunt LC, Pierse R (2008) Does energy consumption cause economic growth? Evidence from a systematic study of over 100 countries. J Policy Model 30:209–220

    Article  Google Scholar 

  19. Ewing BT, Sari R, Soytas U (2007) Disaggregate energy consumption and industrial output in the United States. Energy Policy 35(2):1274–1281

    Article  Google Scholar 

  20. Fang YP (2011) Economic welfare impacts from renewable energy consumption: the China experience. Renew Sust Energ Rev 15:5120–5128

    Article  Google Scholar 

  21. Grossman GM, Helpman E (1990) Trade, innovation, and growth. Am Econ Rev 80(2):86–91

    Google Scholar 

  22. Huang BN, Hwang MJ, Yang CW (2008) Causal relationship between energy consumption and GDP growth revisited: a dynamic panel data approach. Ecol Econ 67:41–54

    Article  Google Scholar 

  23. Im KS, Pesaran MH, ShinY (2003) Testing for unit roots in heterogeneous panels. J Econ 115:53–74

    Article  Google Scholar 

  24. Inglesi-Lotz R (2016) The impact of renewable energy consumption to economic growth: a panel data application. Energy Econ 53:58–63

    Article  Google Scholar 

  25. Jebli MB, Youssef SB (2015) The environmental Kuznets curve, economic growth, renewable and non-renewable energy, and trade in Tunisia. Renew Sust Energ Rev 47:173–185

    Article  Google Scholar 

  26. Koçak E, Sarkgünesi A (2017) The renewable energy and economic growth nexus in black sea and Balkan countries. Energy Policy 100:51–57

    Article  Google Scholar 

  27. Kraft J, Kraft A (1978) On the relationship between energy and GNP. Jf Energy Dev 3:401–403

    Google Scholar 

  28. Lin BQ, Moubarak M (2014) Renewable energy consumption—economic growth nexus for China. Renew Sust Energ Rev 40:111–117

    Article  Google Scholar 

  29. Magazzino C (2015) Energy consumption and GDP in Italy: cointegration and causality analysis. Environ Dev Sustain 17(1):137–153

    Article  Google Scholar 

  30. Menegaki AN, Tiwari AK (2017) The index of sustainable economic welfare in the energy-growth nexus for American countries. Ecol Indic 72:494–509

    Article  Google Scholar 

  31. Menegaki AN, Tugcu CT (2016) Rethinking the energy-growth nexus: proposing an index of sustainable economic welfare for sub-Saharan Africa. Energy Res Soc Sci 17:147–159

    Article  Google Scholar 

  32. Menegaki AN, Tugcu CT (2017) Energy consumption and sustainable economic welfare in G7 countries: a comparison with the conventional nexus. Renew Sust Energ Rev 69:892–901

    Article  Google Scholar 

  33. Moldan B, Janouskova S, Hak T (2012) How to understand and measure environmental sustainability: indicators and targets. Ecol Indic 17:4–13

    Article  Google Scholar 

  34. Muhammad I, Shabbir MS, Saleem S, Bilal K, Ulucak R (2020) Nexus between willingness to pay for renewable energy sources: evidence from Turkey. Environ Sci Pollut Res:1–15

  35. Nasreen S, Anwar S, Ozturk I (2017) Financial stability, energy consumption and environmental quality: Evidence from South Asian economies. Renewable and Sustainable Energy Reviews 67:1105–1122

    CAS  Article  Google Scholar 

  36. Nguyen VK, Shabbir MS, Sail MS, Thuy TH (2020) Does informal economy impede economic growth? Evidence from an emerging economy. J Sustain Finance Investment. https://doi.org/10.1080/20430795.2020.1711501

  37. Ohlers A, Fetters I (2014) The causal relationship between renewable electricity generation and GDP growth: a study of energy sources. Energy Econ 43:125–139

    Article  Google Scholar 

  38. Omay T, Kan EO (2010) Re-examining the threshold effects in the inflation-growth nexus: OECD evidence. Econ Model 27:995–1004

    Article  Google Scholar 

  39. Ozturk I (2010) A literature survey on energy-growth nexus. Energy Policy 38:340–349

    Article  Google Scholar 

  40. Payne JE (2009) On the dynamics of energy consumption and output in the US. Appl Energy 86:575–577

    Article  Google Scholar 

  41. Pedroni P (1999) Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford Bulletin of Economics andstatistics 61(S1):653–670

    Article  Google Scholar 

  42. Pedroni P (2004) Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis: new results. EconomTheory 15:93–130

    Google Scholar 

  43. Romer PM (1990) Endogenous technological change. J Polit Econ 98(5, Part 2):S71–S102

    Article  Google Scholar 

  44. Rosenberg N (1998) The role of electricity in industrial development. Energy J 19(2)

  45. Sadorsky P (2009) Renewable energy consumption and income in emerging economies. Energy Policy 37:4021–4028

    Article  Google Scholar 

  46. Sako M (2005). Outsourcing and offshoring: key trends and issues. Available at SSRN 1463480.

  47. Saleem H, Khan MB, Shabbir MS (2019) The role of financial development, energy demand, and technological change in environmental sustainability agenda: evidence from selected Asian countries. Environ Sci Pollut Res 27:5266–5280 1-15

    Article  Google Scholar 

  48. Sebri M (2015) Use renewables to be cleaner: meta-analysis of the renewable energy consumption-economic growth nexus. Renew Sust Energ Rev 42:657–665

    Article  Google Scholar 

  49. Shabbir MS (2016). Contributing factors of inland investment. Global J Manag Bus Res.

  50. Shabbir MS, Wisdom O (2020) The relationship between corporate social responsibility, environmental investments and financial performance:evidence from manufacturing companies. Environmental Science and Pollution Research 1–12. https://doi.org/10.1007/s11356-020-10217-0

  51. Shabbir MS, Muhammad I (2019) The dynamic impact of foreign portfolio investment on stock prices in Pakistan. Transnatl Corp Rev 11(2):166–178

    Google Scholar 

  52. Shabbir MS, Yaqoob N (2019) The impact of technological advancement on total factor productivity of cotton: a comparative analysis between Pakistan and India. J Econ Struct 8(1):27

    Article  Google Scholar 

  53. Shabbir MS, Aslam E, Irshad A et al (2020) Nexus between corporate social responsibility and financial and non-financial sectors’ performance: a non-linear and disaggregated approach. Environ Sci Pollut Res. https://doi.org/10.1007/s11356-020-09972-x

  54. Shahbaz M, Khan S, Tahir MI (2013) The dynamic links between energy consumption, economic growth, financial development and trade in China: fresh evidence from multivariate framework analysis. Energy Econ 40:8–21

    Article  Google Scholar 

  55. Shahbaz M, Rasool G, Ahmed K, Mahalik MK (2016) Considering the effect of biomass energy consumption on economic growth: fresh evidence from BRICS region. Renew Sust Energ Rev 60:1442–1450

    Article  Google Scholar 

  56. Solarin SA, Ozturk I (2015) On the causal dynamics between hydroelectricity consumption and economic growth in Latin America countries. Renew Sust Energ Rev 52:1857–1868

    Article  Google Scholar 

  57. U.S. Energy Information Administration. International energy outlook 2016; U.S. Energy Information Administration: Washington, USA, 2016.

  58. Yildirim E, Sarac S, Asian A (2012) Energy consumption and economic growth in the USA: evidence from renewable energy. Renew Sust Energ Rev 16:6770–6677

    Article  Google Scholar 

Download references

Author information

Affiliations

  1. School of Economics and Finance of Xi’an Jiaotong University, No.75 Qingyang Road, Chengguan District, Lanzhou City, Gansu Province, 730000, China

    Zhang Yikun

  2. Department of Management Sciences, The University of Azad Jammu and Kashmir, Muzaffarabad, Pakistan

    Ambreen Gul

  3. Department of Management Sciences, Lyallpur Business School, GC University Faisalabad, Faisalabad, Pakistan

    Sharjeel Saleem

  4. Department of Management Sciences, University of Lahore, Lahore, Pakistan

    Malik Shahzad Shabbir

  5. Department of Management Sciences, Comsats University, Lahore, Pakistan

    Kanwal Bilal & Hina Munir Abbasi

Authors
  1. Zhang Yikun
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Ambreen Gul
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Sharjeel Saleem
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Malik Shahzad Shabbir
    View author publications

    You can also search for this author in PubMed Google Scholar

  5. Kanwal Bilal
    View author publications

    You can also search for this author in PubMed Google Scholar

  6. Hina Munir Abbasi
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

Mr. Zhang has completed the analysis part, while Dr. Ambreen wrote the introduction part; Dr. Sharjeel wrote the literature review part; Mr. Malik Shahzad wrote the methodology section; Miss Kanwal wrote the conclusion and abstract sections; and finally, Miss Hina proofread the whole paper and adjusted the paper according to the journal format.

Corresponding author

Correspondence to Malik Shahzad Shabbir.

Ethics declarations

Ethical approval and consent to participate

This study did not use any kind of human participants or human data, which require any kind of approval.

Consent to publish

Our study did not use any kind of individual data such as video and images.

Competing interests

The authors declare no competing interests.

Additional information

Publisher’s note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Responsible Editor: Nicholas Apergis

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Yikun, Z., Gul, A., Saleem, S. et al. The relationship between renewable energy sources and sustainable economic growth: evidence from SAARC countries. Environ Sci Pollut Res (2021). https://doi.org/10.1007/s11356-021-12795-z

Download citation

Keywords

  • Renewable energy sources
  • Sustainable economic growth
  • SAARC countries

JEL Classification

  • E13
  • D50