Unveiling the synergy: How natural resources, energy prices and financial development drive the energy transition in N‐11 countries

Aiping Zhou, Xiao Zhang, Weichen Li and Muhammad Wasif Zafar

Review of Development Economics, 2025, vol. 29, issue 1, 649-669

Abstract: The energy transition (ET) is one of the major components of achieving the Sustainable Development Goal (SDG) 7. Based on the growing recognition of the need for sustainable energy, this study aims to investigate the influence of natural resource rent, energy prices (EPs), financial development (FD), trade and economic growth on the ET from 1990 to 2021 in N‐11 countries. The study employed the Fully Modified Ordinary Least Squares and Dynamic Ordinary Least Squares techniques for the panel data analysis. These test findings revealed that natural resources rent, EPs, trade and economic growth are positively and significantly associated with ET. It indicates that these factors' are essential in promoting the shift towards renewable and sustainable energy sources. Whereas FD has a negative relationship with the ET, which underscores the need for targeted interventions and policy measures to address the challenges faced by financial systems. Moreover, the Pairwise Dumitrescu Hurlin panel causality test results declared the bidirectional association between natural resources and FD, economic growth and EPs and trade with all other variables. The study's outcomes suggest policy implications to promote and accelerate the ET process towards a greener and more sustainable future.

Date: 2025
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