Towards Sustainable Growth: Assessing the Renewable Energy-Growth Nexus in Oil-Exporting Developing Economies using FMOLS and DOLS Approaches

This study investigates the impact of renewable energy consumption on economic growth in a group of ten developing oil-exporting countries from 1990 to 2022. Using panel data, the study employs Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimators to examine the long-run relationship between real GDP per capita and key explanatory variables. The empirical findings reveal that renewable energy consumption exerts a statistically significant positive effect on economic growth at the 5% level. However, this impact is characterized by high inelasticity (0.32%), suggesting that the current contribution of the renewable sector remains marginal relative to the overall economic structure. Furthermore, labor force participation and trade openness demonstrate positive and significant relationships with growth, while capital accumulation shows a statistically insignificant effect, potentially reflecting capital misallocation in resource-dependent economies. These results underscore the urgent need for intensifying investments in green infrastructure and institutional reforms to align with the Sustainable Development Goals (SDGs).