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Green Energy Transition and Development Outcomes in Emerging Economies

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  • Ece Handan GÃœLERYÃœZ

Abstract

This paper investigates the economic and environmental effects of the green energy transition in emerging market economies. Focusing on ten major emerging countries from 2010 to 2022, we examine how renewable energy consumption relates to economic growth, sustainable development, and environmental outcomes. Using panel data and a two-way fixed effects model (with country and year fixed effects), we analyze three key dimensions of development: gross domestic product (GDP) per capita, broad-based sustainable development (measured via the Sustainable Development Goals (SDG) Index and Human Development Index (HDI), and environmental quality (per capita CO₂ emissions). The empirical results indicate that expanding renewable energy usage significantly reduces CO₂ emissions, but it may entail a modest short-term trade-off with economic growth. Renewable energy’s impact on composite sustainable development indicators is less immediate: we find no clear short-run effect on the SDG index, even as renewable uptake shows a positive association with the HDI. Additionally, foreign direct investment (FDI) exhibits a negative relationship with carbon emissions (suggesting a potential “pollution halo†effect), whereas greater trade openness is associated with higher emissions. These findings highlight important policy implications for emerging economies — namely, while green energy transitions can yield substantial environmental benefits and support human development, complementary economic policies are needed to mitigate short-run growth costs and fully realize sustainable development gains.

Suggested Citation

  • Ece Handan GÃœLERYÃœZ, 2026. "Green Energy Transition and Development Outcomes in Emerging Economies," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 2.
    • Handle: RePEc:fis:journl:260229
    DOI: 10.25295/fsecon.1797177
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    References listed on IDEAS

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    1. William Brock & M. Taylor, 2010. "The Green Solow model," Journal of Economic Growth, Springer, vol. 15(2), pages 127-153, June.
    2. Bilgili, Faik & Koçak, Emrah & Bulut, Ümit, 2016. "The dynamic impact of renewable energy consumption on CO2 emissions: A revisited Environmental Kuznets Curve approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 54(C), pages 838-845.
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    Keywords

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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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