The influence of economic factors on sustainable energy consumption: a comparative approach between the OECD and Western Balkan countries
Article Sidebar
Main Article Content
DOI:
https://doi.org/10.17979/ejge.2025.14.1.11356Abstract
This study investigates the influence of economic factors—such as energy use, foreign direct investment, inflation, GDP per capita, trade, population growth, and unemployment—on sustainable energy consumption (SEC) and renewable energy consumption (REC) across 38 OECD and 6 Western Balkan countries from 2010 to 2022. Adopting a comparative approach, the research sheds light on how varying economic contexts shape energy sustainability outcomes in developed and emerging economies. Using panel data from the World Bank and The Global Economy Database, we estimate regression models (OLS, fixed effects, random effects) and employ the generalized method of moments (GMM). We accounted for potential endogeneity with the use of GMM and verified it with Arellano-Bond and Sargan tests. The analysis found that GDP per capita and the openness of a country to trade were positively connected to SEC. Also, inflation and unemployment can serve as disincentives for the use of renewable energy. The findings provide insights for effective energy sustainable development thinking, especially given the economic development and goals for sustainable energy outcomes.
Keywords:
Article Details
References
Adedoyin, F. F., Bekun, F. V., & Alola, A. A. (2020). Growth impact of transition from non-renewable to renewable energy in the EU: The role of research and development expenditure. Renewable Energy, 159, 1139–1145. https://doi.org/10.1016/j.renene.2020.06.015
Akpanke, T. A., Deka, A., Ozdeser, H., & Seraj, M. (2023). Does foreign direct investment promote renewable energy use? An insight from West African countries. Renewable Energy Focus, 44, 124–131. https://doi.org/10.1016/j.ref.2022.11.007
Alper, A., & Oguz, O. (2016). The role of renewable energy consumption in economic growth: Evidence from asymmetric causality. Renewable and Sustainable Energy Reviews, 60, 953–959. https://doi.org/10.1016/j.rser.2016.01.123
Apergis, N., & Payne, J. E. (2010). Energy consumption and growth in South America: Evidence from a panel error correction model. Energy Economics, 32(6), 1421-1426.
Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29–51. https://doi.org/10.1016/0304-4076(94)01642-D
Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277–297. https://doi.org/10.2307/2297968
Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115–143. https://doi.org/10.1016/S0304-4076(98)00009-8
Blundell, R., & Bond, S. (2000). GMM estimation with persistent panel data: An application to production functions. Econometric Reviews, 19(3), 321–340. https://doi.org/10.1080/07474930008800475
Cai, Y., & Aoyama, Y. (2018). Fragmented authorities, institutional misalignments, and challenges to renewable energy transition: A case study of wind power curtailment in China. Energy Research & Social Science, 41, 71–79. https://doi.org/10.1016/j.erss.2018.04.021
Chen, C., Pinar, M., & Stengos, T. (2020). Renewable energy consumption and economic growth nexus: Evidence from a threshold model. Energy Policy, 139, 111295. https://doi.org/10.1016/j.enpol.2020.111295
Dincer, I., & Zamfirescu, C. (2011). Sustainable energy systems and applications. New York, NY: Springer Science & Business Media. https://doi.org/10.1007/978-0-387-95861-3
Inglesi-Lotz, R. (2016). The impact of renewable energy consumption to economic growth: A panel data application. Energy Economics, 53, 58–63. https://doi.org/10.1016/j.eneco.2015.01.003
Khandker, L. L., Amin, S. B., & Khan, F. (2018). Renewable energy consumption and foreign direct investment: Reports from Bangladesh. Journal of Accounting, 8(3), 72–87.
Koçak, E., & Şarkgüneşi, A. (2017). The renewable energy and economic growth nexus in Black Sea and Balkan countries. Energy Policy, 100, 51–57. https://doi.org/10.1016/j.enpol.2016.10.007
Lin, B., & Moubarak, M. (2014). Renewable energy consumption-economic growth nexus for China. Renewable and Sustainable Energy Reviews, 40, 111–117. https://doi.org/10.1016/j.rser.2014.07.128
Ocal, O., & Aslan, A. (2013). Renewable energy consumption-economic growth nexus in Turkey. Renewable and Sustainable Energy Reviews, 28, 494–499. https://doi.org/10.1016/j.rser.2013.08.036
Ozturk, I., & Acaravci, A. (2010). CO₂ emissions, energy consumption and economic growth in Turkey. Renewable and Sustainable Energy Reviews, 14(9), 3220–3225. https://doi.org/10.1016/j.rser.2010.07.005
Pao, H. T., Yu, H. C., & Yang, Y. H. (2011). Modeling the CO₂ emissions, energy use, and economic growth in Russia. Energy, 36(8), 5094–5100. https://doi.org/10.1016/j.energy.2011.06.004
Qamruzzaman, M., & Jianguo, W. (2020). The asymmetric relationship between financial development, trade openness, foreign capital flows, and renewable energy consumption: Fresh evidence from panel NARDL investigation. Renewable Energy, 159, 827–842. https://doi.org/10.1016/j.renene.2020.06.069
Rafindadi, A. A., & Ozturk, I. (2017). Impacts of renewable energy consumption on the German economic growth: Evidence from combined cointegration test. Renewable and Sustainable Energy Reviews, 75, 1130–1141. https://doi.org/10.1016/j.rser.2016.11.093
Sadiq, M., Ou, J. P., Duong, K. D., Van, L., & Bui, T. X. (2023). The influence of economic factors on the sustainable energy consumption: Evidence from China. Economic Research–Ekonomska Istraživanja, 36(1), 1751–1773. https://doi.org/10.1080/1331677X.2022.2093244
Shahbaz, M., Raghutla, C., Chittedi, K. R., Jiao, Z., & Vo, X. V. (2020). The effect of renewable energy consumption on economic growth: Evidence from the renewable energy country attractive index. Energy, 207, 118162. https://doi.org/10.1016/j.energy.2020.118162
Solomon, B. D., & Krishna, K. (2011). The coming sustainable energy transition: History, strategies, and outlook. Energy Policy, 39(11), 7422–7431. https://doi.org/10.1016/j.enpol.2011.09.009
Stern, D. (2004). The rise and fall of the environmental Kuznets curve. World Development, 32(8), 1419–1439. https://doi.org/10.1016/j.worlddev.2004.03.004
Stern, D. I. (2011). The role of energy in economic growth. Annals of the New York Academy of Sciences, 1219(1), 26–51. https://doi.org/10.1111/j.1749-6632.2010.05921.x
Tester, J. W., Drake, E. M., Driscoll, M. J., Golay, M. W., & Peters, W. A. (2012). Sustainable energy: Choosing among options. Cambridge, MA: MIT Press.
Wang, Q., & Wang, L. (2020). Renewable energy consumption and economic growth in OECD countries: A nonlinear panel data analysis. Energy, 207, 118200. https://doi.org/10.1016/j.energy.2020.118200
Yildirim, E., Saraç, Ş., & Aslan, A. (2012). Energy consumption and economic growth in the USA: Evidence from renewable energy. Renewable and Sustainable Energy Reviews, 16(9), 6770–6774. https://doi.org/10.1016/j.rser.2012.09.004