The majority of studies analyzed show a positive and statistically significant impact of renewable energy consumption on economic growth. Nevertheless, some studies suggest a limited effect, while others find no statistically significant effect. Faced with this problem, we conducted a study aimed at analyzing the impact of renewable energy consumption on economic growth in the Kingdom of Saudi Arabia for the period 1990–2020. To determine the integration properties of the variables, we utilized the sharp and smooth structural breaks unit root test developed by Shahbaz, Omay and Roubaud (SOR). We also used the bootstrap approach of testing ARDL limits to examine the cointegration between variables. Using the VECM model, we studied the causal relationship between economic growth and its determinants. The results show, in the short and long run, the existence of a bidirectional causality between renewable energy consumption and economic growth (Feedback Hypothesis). Thus, there is a bidirectional relationship between GDP and capital and also between GDP and labor, in the long run. Therefore, an important policy implication resulting from this analysis is that renewable energy can be considered as an important factor for sustainable economic development in Saudi Arabia. The findings for Saudi Arabia may also be relevant for oil exporting countries to achieve efficiency and promote the renewable energy sector beyond oil.
The paper investigates the relationship between Saudi economic growth, renewable energy consumption and trade openness during the 1980-2017 period. By using the Bootstrap Autoregressive Distributed Lag (BARDL) approach and the Granger causality analysis, the results prove the existence of a cointegration relationship between the considered variables. In order to test for Granger causality in the presence of cointegration among the variables, the results indicate that there is a short-run unidirectional causality running from GDP to trade openness. Thus, a bidirectional causality is detected both between (REC-TOP) and between (PIB-REC). In contrast, in the long run, there is a one-way causal relationship running from renewable energy consumption, trade openness to economic growth. These new findings will help policymakers and government officials better understand the role of renewable energy and economic growth in Saudi Arabia's development.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.