Renewable electricity consumption and economic growth nexus – evidence from high-, middle- and low-income countries

Recent decades have witnessed growing concerns over sources of energy consumption and their role in economic development. Renewable energy and electrification have been touted by experts as a solution to mitigate these global issues. Considering this, the study investigates the intricate relationship between economic growth and renewable electricity consumption between the years 2000 to 2021 across a diverse spectrum of countries categorized by income levels. Renewable electricity consumption and economic growth data was collected for 48 countries. These countries were then further divided according to their income levels. The current study examines the relationship between renewable electricity consumption and economic growth through the lens of four distinct perspectives: the feedback hypothesis, the neutrality hypothesis, the growth hypothesis, and the conservation hypothesis. The Panel ARDL methods including the PMG, MG and DFE were employed to explore the presence of cointegration and the impact of renewable electricity usage on economic growth. The outcome of the methods indicate clearly that green electricity usage has a positive impact on economic growth across all income levels albeit at varying magnitudes. The findings contribute to the understanding of sustainable development and energy policies tailored to the specific economic contexts of countries at various income levels. Keywords: Renewable Electricity, Economic Growth, Panel ARDL