What contributes more to BRI economic growth, renewable or non-renewable energy consumption: A third generation panel data analysis.

ABSTRACT

Given the increasing investment by Belt and Road Initiative (BRI) participants in the renewable energy industry, it is imperative to ascertain how much this investment contributes to economic growth. The objective of this study is to ascertain the extent to which renewable energy contributes to economic growth within the Belt and Road Initiative compared to non-renewable energy sources. Prior studies have yet to incorporate oil prices as a variable in the production function, among other output aspects. This study integrates the inclusion of real oil prices as a variable within the production function alongside capital, labor, renewable energy consumption, and non-renewable energy consumption. A cohort including 49 Belt and Road Initiative participants was formed, encompassing data from 1990 to 2019. The data has undergone an initial examination to assess cross-sectional dependence, slope heterogeneity, and structural break(s), and are verified. Hence, third-generation panel data analysis has been utilized. The continuously updated fully modified estimator and continuously updated biased corrected estimator provide evidence supporting the notion that renewable energy plays a substantial role in fostering economic growth within nations participating in the Belt and Road Initiative. Furthermore, this contribution is found to be more pronounced when compared to the impact of non-renewable energy sources. The study's findings inform policy recommendations at both the BRI and national level.