IDEAS home Printed from https://ideas.repec.org/a/eco/journ2/2020-06-82.html
   My bibliography  Save this article

Renewable Energy - Economic Growth Nexus in South Africa: Linear, Nonlinear or Non-existent?

Author

Listed:
  • Bothwell Nyoni

    (Innoventon and the Downstream Chemicals Technology Station, Nelson Mandela University, South Africa,)

  • Andrew Phiri

    (Department of Economics, Faculty of Business and Economic Studies, Nelson Mandela University, Port Elizabeth, South Africa.)

Abstract

With escalating fears of climate change reaching irreversible levels, much emphasis has been recently placed on shifting to renewable sources of energy in supporting future economic livelihood. Focusing on South Africa, as Africa s largest energy consumer and producer, our study investigates the short-run and long-run effects of renewable energy on economic growth using linear and nonlinear autoregressive distributive lag (ARDL) models. Working with data availability, our empirical analysis is carried out over the period of 1991 to 2016, and our results unanimously fail to confirm any linear or nonlinear cointegration effects of the consumption and production of renewable energy on South African economic growth. We view the absence of cointergation relations as an indication of inefficient usage of renewable energy in supporting sustainable growth in South Africa and hence advise policymakers to accelerate the establishment of necessary renewable infrastructure in supporting future energy requireme ts.

Suggested Citation

  • Bothwell Nyoni & Andrew Phiri, 2020. "Renewable Energy - Economic Growth Nexus in South Africa: Linear, Nonlinear or Non-existent?," International Journal of Energy Economics and Policy, Econjournals, vol. 10(6), pages 635-644.
    • Handle: RePEc:eco:journ2:2020-06-82
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijeep/article/download/7706/5518
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijeep/article/view/7706/5518
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sunde, Tafirenyika, 2017. "Foreign direct investment, exports and economic growth: ADRL and causality analysis for South Africa," Research in International Business and Finance, Elsevier, vol. 41(C), pages 434-444.
    2. Menegaki, Angeliki N., 2011. "Growth and renewable energy in Europe: A random effect model with evidence for neutrality hypothesis," Energy Economics, Elsevier, vol. 33(2), pages 257-263, March.
    3. PHIRI Andrew & NYONI Bothwell, 2016. "Re-Visting The Electricity-Growth Nexus In South Africa," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 11(1), pages 97-111, April.
    4. Shahbaz, Muhammad & Loganathan, Nanthakumar & Zeshan, Mohammad & Zaman, Khalid, 2015. "Does renewable energy consumption add in economic growth? An application of auto-regressive distributed lag model in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 44(C), pages 576-585.
    5. Apergis, Nicholas & Payne, James E., 2010. "Renewable energy consumption and economic growth: Evidence from a panel of OECD countries," Energy Policy, Elsevier, vol. 38(1), pages 656-660, January.
    6. Yu, Eden S. H. & Hwang, Been-Kwei, 1984. "The relationship between energy and GNP : Further results," Energy Economics, Elsevier, vol. 6(3), pages 186-190, July.
    7. Walwyn, David Richard & Brent, Alan Colin, 2015. "Renewable energy gathers steam in South Africa," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 390-401.
    8. Fang, Yiping, 2011. "Economic welfare impacts from renewable energy consumption: The China experience," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 5120-5128.
    9. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    10. Lin, Boqiang & Moubarak, Mohamed, 2014. "Renewable energy consumption – Economic growth nexus for China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 111-117.
    11. Ocal, Oguz & Aslan, Alper, 2013. "Renewable energy consumption–economic growth nexus in Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 28(C), pages 494-499.
    12. Sebri, Maamar & Ben-Salha, Ousama, 2014. "On the causal dynamics between economic growth, renewable energy consumption, CO2 emissions and trade openness: Fresh evidence from BRICS countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 14-23.
    13. Khoza, Keorapetse & Thebe, Relebogile & Phiri, Andrew, 2016. "Nonlinear impact of inflation on economic growth in South Africa: A smooth transition regression (STR) analysis," MPRA Paper 73840, University Library of Munich, Germany.
    14. Tugcu, Can Tansel & Ozturk, Ilhan & Aslan, Alper, 2012. "Renewable and non-renewable energy consumption and economic growth relationship revisited: Evidence from G7 countries," Energy Economics, Elsevier, vol. 34(6), pages 1942-1950.
    15. Hlalefang Khobai & Pierre Le Roux, 2018. "Does Renewable Energy Consumption Drive Economic Growth: Evidence from Granger-Causality Technique," International Journal of Energy Economics and Policy, Econjournals, vol. 8(2), pages 205-212.
    16. Mounir Ben Mbarek & Ines Abdelkafi & Rochdi Feki, 2018. "Nonlinear Causality Between Renewable Energy, Economic Growth, and Unemployment: Evidence from Tunisia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(2), pages 694-702, June.
    17. Aviral Kumar Tiwari & Nicholas Apergis & Olaolu Richard Olayeni, 2015. "Renewable and nonrenewable energy production and economic growth in sub-Saharan Africa: a hidden cointegration analysis," Applied Economics, Taylor & Francis Journals, vol. 47(9), pages 861-882, February.
    18. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    19. Ewing, Bradley T. & Payne, James E. & Caporin, Massimilano, 2022. "The Asymmetric Impact of Oil Prices and Production on Drilling Rig Trajectory: A correction," Resources Policy, Elsevier, vol. 79(C).
    20. Bhattacharya, Mita & Paramati, Sudharshan Reddy & Ozturk, Ilhan & Bhattacharya, Sankar, 2016. "The effect of renewable energy consumption on economic growth: Evidence from top 38 countries," Applied Energy, Elsevier, vol. 162(C), pages 733-741.
    21. Apergis, Nicholas & Payne, James E., 2010. "Coal consumption and economic growth: Evidence from a panel of OECD countries," Energy Policy, Elsevier, vol. 38(3), pages 1353-1359, March.
    22. Rafindadi, Abdulkadir Abdulrashid & Ozturk, Ilhan, 2017. "Impacts of renewable energy consumption on the German economic growth: Evidence from combined cointegration test," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 1130-1141.
    23. Luxolo Malangeni & Andrew Phiri, 2018. "Education and Economic Growth in Post-apartheid South Africa: An Autoregressive Distributive Lag Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 8(2), pages 101-107.
    24. Sorensen, Bent, 1991. "A history of renewable energy technology," Energy Policy, Elsevier, vol. 19(1), pages 8-12.
    25. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    26. Andrew Phiri, 2018. "Nonlinear impact of inflation on economic growth in South Africa: a smooth transition regression analysis," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 10(1), pages 1-17.
    27. Kahia, Montassar & Aïssa, Mohamed Safouane Ben & Lanouar, Charfeddine, 2017. "Renewable and non-renewable energy use - economic growth nexus: The case of MENA Net Oil Importing Countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 71(C), pages 127-140.
    28. Olayeni Olaolu Richard, 2012. "Energy consumption and economic growth in sub-Saharan Africa: An asymmetric cointegration analysis," International Economics, CEPII research center, issue 129, pages 99-118.
    29. Inglesi-Lotz, Roula, 2016. "The impact of renewable energy consumption to economic growth: A panel data application," Energy Economics, Elsevier, vol. 53(C), pages 58-63.
    30. Yu, Eden S. H. & Jin, Jang C., 1992. "Cointegration tests of energy consumption, income, and employment," Resources and Energy, Elsevier, vol. 14(3), pages 259-266, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrew Phiri & Bothwell Nyoni, 2023. "Clean versus dirty electricity generation and economic growth in South Africa: time–frequency study," Economic Change and Restructuring, Springer, vol. 56(4), pages 2801-2824, August.
    2. Shah, Muhammad Ibrahim & Kirikkaleli, Dervis & Adedoyin, Festus Fatai, 2021. "Regime switching effect of COVID-19 pandemic on renewable electricity generation in Denmark," Renewable Energy, Elsevier, vol. 175(C), pages 797-806.
    3. Espoir, Delphin Kamanda & Sunge, Regret & Bannor, Frank, 2021. "Economic growth, renewable and nonrenewable electricity consumption: A fresh evidence from a panel sample of African countries," EconStor Preprints 238063, ZBW - Leibniz Information Centre for Economics.
    4. Tenaw, Dagmawe, 2022. "Do traditional energy dependence, income, and education matter in the dynamic linkage between clean energy transition and economic growth in sub-Saharan Africa?," Renewable Energy, Elsevier, vol. 193(C), pages 204-213.
    5. Hlongwane, Nyiko Worship & Daw, Olebogeng David & Sithole, Mixo Sweetness, 2023. "Renewable electricity generation and government expenditure on economic growth of South Africa and Botswana," MPRA Paper 116497, University Library of Munich, Germany, revised 24 Feb 2023.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Troster, Victor & Shahbaz, Muhammad & Uddin, Gazi Salah, 2018. "Renewable energy, oil prices, and economic activity: A Granger-causality in quantiles analysis," Energy Economics, Elsevier, vol. 70(C), pages 440-452.
    2. Shahbaz, Muhammad & Raghutla, Chandrashekar & Chittedi, Krishna Reddy & Jiao, Zhilun & Vo, Xuan Vinh, 2020. "The effect of renewable energy consumption on economic growth: Evidence from the renewable energy country attractive index," Energy, Elsevier, vol. 207(C).
    3. Daniel Ştefan Armeanu & Georgeta Vintilă & Ştefan Cristian Gherghina, 2017. "Does Renewable Energy Drive Sustainable Economic Growth? Multivariate Panel Data Evidence for EU-28 Countries," Energies, MDPI, vol. 10(3), pages 1-21, March.
    4. Amri, Fethi, 2017. "The relationship amongst energy consumption (renewable and non-renewable), and GDP in Algeria," Renewable and Sustainable Energy Reviews, Elsevier, vol. 76(C), pages 62-71.
    5. Chang, Chiu-Lan & Fang, Ming, 2022. "Renewable energy-led growth hypothesis: New insights from BRICS and N-11 economies," Renewable Energy, Elsevier, vol. 188(C), pages 788-800.
    6. Chica-Olmo, Jorge & Sari-Hassoun, Salaheddine & Moya-Fernández, Pablo, 2020. "Spatial relationship between economic growth and renewable energy consumption in 26 European countries," Energy Economics, Elsevier, vol. 92(C).
    7. Bilgili, Faik & Kuşkaya, Sevda & Toğuç, Nurhan & Muğaloğlu, Erhan & Koçak, Emrah & Bulut, Ümit & Bağlıtaş, H. Hilal, 2019. "A revisited renewable consumption-growth nexus: A continuous wavelet approach through disaggregated data," Renewable and Sustainable Energy Reviews, Elsevier, vol. 107(C), pages 1-19.
    8. Radmehr, Riza & Henneberry, Shida Rastegari & Shayanmehr, Samira, 2021. "Renewable Energy Consumption, CO2 Emissions, and Economic Growth Nexus: A Simultaneity Spatial Modeling Analysis of EU Countries," Structural Change and Economic Dynamics, Elsevier, vol. 57(C), pages 13-27.
    9. Adewuyi, Adeolu O. & Awodumi, Olabanji B., 2017. "Renewable and non-renewable energy-growth-emissions linkages: Review of emerging trends with policy implications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 275-291.
    10. Zafar, Muhammad Wasif & Shahbaz, Muhammad & Hou, Fujun & Sinha, Avik, 2018. "¬¬¬¬¬¬From Nonrenewable to Renewable Energy and Its Impact on Economic Growth: Silver Line of Research & Development Expenditures in APEC Countries," MPRA Paper 90611, University Library of Munich, Germany, revised 10 Dec 2018.
    11. Adewuyi, Adeolu O. & Awodumi, Olabanji B., 2017. "Biomass energy consumption, economic growth and carbon emissions: Fresh evidence from West Africa using a simultaneous equation model," Energy, Elsevier, vol. 119(C), pages 453-471.
    12. Rahman, Mohammad Mafizur & Velayutham, Eswaran, 2020. "Renewable and non-renewable energy consumption-economic growth nexus: New evidence from South Asia," Renewable Energy, Elsevier, vol. 147(P1), pages 399-408.
    13. Marques, António Cardoso & Fuinhas, José Alberto & Neves, Sónia Almeida, 2018. "Ordinary and Special Regimes of electricity generation in Spain: How they interact with economic activity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 1226-1240.
    14. Seong-Hoon Lee & Yonghun Jung, 2018. "Causal dynamics between renewable energy consumption and economic growth in South Korea: Empirical analysis and policy implications," Energy & Environment, , vol. 29(7), pages 1298-1315, November.
    15. Fangming Xie & Chuanzhe Liu & Huiying Chen & Ning Wang, 2018. "Threshold Effects of New Energy Consumption Transformation on Economic Growth," Sustainability, MDPI, vol. 10(11), pages 1-14, November.
    16. Chen, Chaoyi & Pinar, Mehmet & Stengos, Thanasis, 2020. "Renewable energy consumption and economic growth nexus: Evidence from a threshold model," Energy Policy, Elsevier, vol. 139(C).
    17. Shidong, Li & Chupradit, Supat & Maneengam, Apichit & Suksatan, Wanich & Phan The, Cong & Nguyen Ngoc, Quynh, 2022. "The moderating role of human capital and renewable energy in promoting economic development in G10 economies: Evidence from CUP-FM and CUP-BC methods," Renewable Energy, Elsevier, vol. 189(C), pages 180-187.
    18. Hlalefang Khobai, 2018. "Renewable energy consumption and economic growth in Indonesia. Evidence from the ARDL bounds testing approach," Working Papers 1806, Department of Economics, Nelson Mandela University, revised Feb 2018.
    19. Le, Thanh Ha, 2022. "Connectedness between nonrenewable and renewable energy consumption, economic growth and CO2 emission in Vietnam: New evidence from a wavelet analysis," Renewable Energy, Elsevier, vol. 195(C), pages 442-454.
    20. Dogan, Eyup & Seker, Fahri, 2016. "Determinants of CO2 emissions in the European Union: The role of renewable and non-renewable energy," Renewable Energy, Elsevier, vol. 94(C), pages 429-439.

    More about this item

    Keywords

    Renewable energy; economic growth; ARDL; nonlinear ARDL; South Africa; Sub-Sahara Africa (SSA).;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ2:2020-06-82. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.