European commitment to COP21 and the role of energy consumption, FDI, trade and economic complexity in sustaining economic growth. (1st November 2020)

• Record Type: Journal Article
• Authors: Doğan, Buhari; Balsalobre-Lorente, Daniel; Nasir, Muhammad Ali
• Is Part Of: Journal of environmental management. Volume 273(2020)
• Publication Date: 2020-11-01
• Subjects: Renewable energy. COP 21 -- Energy consumption -- FDI -- Institutional quality -- Complexity -- Economic growth -- Trade; O13 -- P18 -- Q42 -- Q43; Environmental policy -- Periodicals; Environmental management -- Periodicals; Environment -- Periodicals; Ecology -- Periodicals; 363.705
• DOI: 10.1016/j.jenvman.2020.111146
• Languages: English
• ISSNs: 0301-4797

Abstract

Abstract: The nexus between economic growth and energy consumption has been exhaustively explored, yet the empirical evidence and the theoretical points of view remain at odds. This study contextualises and capitalises on this discrepancy and examines the connection between non-renewable and renewable energy consumption and economic growth, considering the moderating impact of economic complexity, trade openness, FDI and institutional quality. We use a panel quantile regression model and data from 32 European countries in the period 1995–2014. Our key results show that economic complexity, renewable energy consumption, trade openness, FDI and institutional quality enhance economic growth. The results for non-renewable energy consumption showed both a positive and a negative impact in different quantiles, indicating that the consumption of renewable energy is in fact more effective for economic growth than the use of non-renewables. Our findings have far-reaching implications for stakeholders and policymakers working on sustainable economic growth and energy policy with a view to meeting the commitments made under the Paris Agreement (COP21). Highlights: Economic complexity contributes to economic growth. Trade openness, foreign direct investment and institutional quality enhance economic growth. Renewable energy is more suitable for economic growth than non-renewable. To honour Paris Agreement (COP21), renewable energy consumption should be encouraged.