Renewable energy and economic growth in the MENA region: empirical evidence and policy implications

Philipp Dees and Georgeta Vidican Auktor

Middle East Development Journal, 2018, vol. 10, issue 2, 225-247

Abstract: We estimate the impact of an increase of installed capacity for electricity generation from renewable sources and from increasing renewable electricity generation on economic growth in the MENA region, using a neoclassical growth function that includes capital, labor and energy use as additional input factors. Our working hypothesis is that there could be a negative impact from renewable electricity on growth, given the high initial investments associated with alternative energy technologies. We could not prove this hypothesis and even found some evidence for a positive relation between renewable electricity and growth, mainly for renewable electricity generation; however, causality remains unclear. The results hold for several robustness checks. We conclude that investing in renewables does not hinder growth in MENA countries.

Date: 2018
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DOI: 10.1080/17938120.2018.1520000

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