Fossil and Renewable Energy, Conflict, Economic Growth, and Military Expenditure: The Case of Algeria for Environmental Economics and Policy Studies

Fossil fuels and their transportation networks have become significant concerns for countries, local communities, and international companies in recent decades. This study aims to examine the influence of renewable energy (RE) infrastructure on conflicts and terrorist activities and to explore the varying degrees of threat posed by conflicts and terrorist attacks. The autoregressive distributed lag (ARDL) model is employed to analyze the long-term relationship among the variables between 1989 and 2016. Granger's causality test reveals bidirectional causalities between the variables in the long run. However, in the short term, the test indicates unidirectional causalities as follows: fossil energy and economic growth impacting terrorism, RE impacting economic growth, and military expenditure influencing both economic growth and RE. In the long run, the use of fossil energy increases the risk of terrorist acts, while the consumption of RE contributes to economic growth. Notably, this study demonstrates that, contrary to long-term expectations, economic growth has actually reduced terrorism in Algeria. Consequently, Algeria has made significant investments in both the military and RE sectors to mitigate conflicts and terrorist attacks, thereby fostering economic growth.