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Beyond environmental benefits: assessing the microeconomic impacts of renewable energy investments by a multinational firm

Author

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  • Chokri Zehri

    (College of Business Administration in Hawtat Bani Tamim, Prince Sattam Bin Abdulaziz University)

  • Noureddine Kerrouche

    (College of Business Administration in Hawtat Bani Tamim, Prince Sattam Bin Abdulaziz University)

  • Latifa Saleh ben Ammar

    (Prince Sattam bin Abdulaziz University)

Abstract

Firms’ investment in renewable energy—specifically focusing on solar, wind, and other sustainable energy technologies—includes research and development expenditures and capital investments for constructing or expanding renewable energy production facilities. These investments offer undeniable ecological and social benefits; however, their precise economic impact remains uncertain, particularly when examined through microeconomic data. This study analyzes 82 Saudi firms directly engaged in renewable energy production and innovation, spanning sectors such as solar photovoltaic systems, wind turbine manufacturing, and energy storage solutions, from 2010 to 2023. Using a dynamic panel data model and the Generalized Method of Moments estimation approach, we assessed the impact of renewable energy investment on key economic indicators, including gross domestic product growth, foreign direct investment, employment, and exports. Our analysis reveals that increased investment in renewable energy has positively contributed to gross domestic product growth, attracted foreign direct investment inflows, and created new jobs, reflecting a favorable investment climate. However, the findings also highlight a comparatively low potential for export growth in this sector. By conducting rigorous robustness checks and instrumental variables analysis, we ensured the reliability of our results across various specifications. The study provides actionable policy recommendations to assist Saudi policymakers in maximizing the economic benefits of firms’ investment in renewable energy.

Suggested Citation

  • Chokri Zehri & Noureddine Kerrouche & Latifa Saleh ben Ammar, 2025. "Beyond environmental benefits: assessing the microeconomic impacts of renewable energy investments by a multinational firm," Environment Systems and Decisions, Springer, vol. 45(2), pages 1-13, June.
    • Handle: RePEc:spr:envsyd:v:45:y:2025:i:2:d:10.1007_s10669-025-10005-6
    DOI: 10.1007/s10669-025-10005-6
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    References listed on IDEAS

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    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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