The Importance of Renewable Energy in Economic Growth

The purpose of this paper is to estimate the impact of renewable energy consumption from combustible renewable and waste sources on economic growth in emerging countries. We analyze the stylized facts of renewable energy and emerging countries related to four regions (Africa, Europe, Latin America, and Asia). We use recent data in the cob-Douglas function and applying a non-stationary panel model for 15 emerging countries covering the period (1990-2011). The Granger causality test showed that there is no causal relationship between renewable energy consumption of combustible renewable and waste sources and economic growth that confirm the neutrality hypothesis. The results supported a positive and significant effect of renewable energy consumption of this source on economic growth in emerging countries. The absence of a causal relationship can be explained by the inefficient use of combustible renewable and waste in the majority of those emerging countries. The consumption of low variability renewable energy such as renewable and waste stimulates economic growth in emerging countries.