The dynamic links between nuclear energy and sustainable economic growth. Do institutions matter?. (September 2021) - Christoforidis, Theodoros
Abstract: This study investigates the relationship between nuclear energy consumption and economic growth and the role of institutional quality in explaining this relationship using panel data of 18 top nuclear power-consuming countries for the period 1995–2017. It is the first research effort that incorporates the impact of institutional arrangements into the nexus between nuclear energy and economic growth. For this reason, we employ an institutional quality index which constitutes a composite measure of core institutional dimensions such as the rule of law and regulatory efficiency. The results of first and second-generation panel unit root and cointegration tests reveal a long-run relationship between economic growth, nuclear energy consumption, institutional quality, real gross fixed capital formation, and labor force. The pooled mean group estimation shows that nuclear energy consumption and institutional quality exercise significant positive effects on economic growth in the long run. In contrast, higher institutional quality has a negative long-run impact on the use of nuclear power. Furthermore, it is only observed a unidirectional causal effect from economic growth to nuclear energy consumption in the short run. Given the global controversies over the role of nuclear power in promoting sustainable economic growth, our findings imply that the institutional framework of the countries that consider nuclear energy as a long-term clean energy option has to be reassessed. Highlights: Nuclear energy use and institutional quality affect the economic growth of nuclear energy-consuming countries positively. Higher institutional quality has a negative long-run impact on nuclear power consumption. Streamlining old regulations can create a well-informed environment on the role of nuclear energy in sustainable development.