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The Relationship between Renewable Energy and Human Development in OECD Countries: A Panel Data Analysis

Author

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  • Mahmut Unsal Sasmaz

    (Department of Public Finance, Faculty of Economics and Administrative Sciences, Usak University, Usak 64000, Turkey)

  • Emre Sakar

    (Department of Public Finance, Faculty of Economics and Administrative Sciences, Usak University, Usak 64000, Turkey)

  • Yunus Emre Yayla

    (Department of Public Finance, Social Sciences Institute, Afyon Kocatepe University, Afyonkarahisar 03000, Turkey)

  • Ulas Akkucuk

    (Department of Management, Faculty of Economics and Administrative Sciences, Bogazici University, Istanbul 34342, Turkey)

Abstract

Renewable energy has attracted researcher attention in recent years, and the number of studies conducted on the topic has increased. The importance of renewable energy has increased because certain energy resources are exhaustible and they damage the environment in various ways. Fossil fuel-based energy is the main culprit for environmental damage and lately renewable energy is the main focus as a safe alternative to fossil fuels. However, replacement of fossil fuels by renewables may have a negative impact on human development, even if it has a positive impact on the environment. With this rationale, this study investigates the relationship between renewable energy and human development in 28 OECD (Organization for Economic Cooperation and Development) countries from 1990 to 2017 by using the Westerlund and Edgerton panel cointegration test with structural breaks and the Dumitrescu and Hurlin causality test. The results of the panel data analysis revealed that renewable energy affected human development positively. In addition, the causality test determined the presence of a bidirectional causality relationship between renewable energy and human development. This study is unique in the sense that it is the only study in the literature examining the relationship between human development index and renewable energy for the countries in question. While similar analyses were conducted in the past for different regions or for just one type of renewable energy, no such study has been conducted in this scale with this method. Another differentiating feature of the study is that it demonstrates the bidirectional nature of the study not just the unidirectional causality. Policymakers are advised to invest in renewable energy projects and also create frameworks which provide incentives to the private sector for renewable energy production.

Suggested Citation

  • Mahmut Unsal Sasmaz & Emre Sakar & Yunus Emre Yayla & Ulas Akkucuk, 2020. "The Relationship between Renewable Energy and Human Development in OECD Countries: A Panel Data Analysis," Sustainability, MDPI, vol. 12(18), pages 1-16, September.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:18:p:7450-:d:411631
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    3. Adekoya, Oluwasegun B. & Olabode, Joshua K. & Rafi, Syed K., 2021. "Renewable energy consumption, carbon emissions and human development: Empirical comparison of the trajectories of world regions," Renewable Energy, Elsevier, vol. 179(C), pages 1836-1848.
    4. Musakwa Mercy T. & Odhiambo Nicholas M., 2022. "Energy Consumption and Human Development in South Africa: Empirical Evidence from Disaggregated Data," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 32(2), pages 1-23, June.
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    12. Mercy T. Musakwa & Nicholas M. Odhiambo, "undated". "Energy Consumption And Human Development In South Africa: Empirical Evidence From Disaggregated Data," Working Papers AESRI03, African Economic and Social Research Institute (AESRI).
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    18. Musakwa, Mercy T & Odhiambo, Nicholas M, 2021. "Energy consumption and human development in South Africa: Empirical evidence from disaggregated data," Working Papers 28233, University of South Africa, Department of Economics.
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    22. Chien-Heng Chou & Sa Ly Ngo & Phung Phi Tran, 2023. "Renewable Energy Integration for Sustainable Economic Growth: Insights and Challenges via Bibliometric Analysis," Sustainability, MDPI, vol. 15(20), pages 1-26, October.
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