AN INVESTIGATION OF THE CONTRIBUTION OF RENEWABLE AND NON-RENEWABLE ENERGY CONSUMPTION TO ECONOMIC GROWTH IN OIC COUNTRIES

Abstract

Modeling the relationship between energy consumption and economic growth in developing economies has been a very active area of research. In recent years, renewable energy resources have increased their shares in
electricity generation in the majority of countries due to environmental and
security of supply concerns. This study considers the simultaneous use of
renewable and non-renewable energy consumption to investigate the longrun relationship between two types of energy consumption and economic growth. It makes a comparison between renewable and non-renewable energy sources in order to determine which type of energy consumption is more important for economic growth processes in OIC countries within a multivariate panel data framework over the period 1990-2010. In addition to renewable and non-renewable energy consumption measures, the model includes the measures of the real gross capital formation and the labor force. The results of the unit root test indicate that all series are non-stationary in level and integrated of order one. Afterwards, the panel co-integration test results indicate that there are the co-integrating relationships between real GDP, renewable energy consumption, non-renewable energy consumption, real gross fixed capital formation, and the labor force. The results of the Dynamic OLS (DOLS) estimator indicate that renewable and nonrenewable energy consumption have a positive and significant effect on GDP but the impact of non-renewable energy is more than renewable energy. Also, the impact of real gross fixed capital and the labor force on economic growth is positive and statistically significant.