Causal dynamics between renewable energy consumption and economic growth in South Korea: Empirical analysis and policy implications

Abstract

This paper examines the causal relationship between renewable energy consumption and economic growth in South Korea using a framework of the conventional neo-classical production function of capital, labor, and renewable energy. We use cointegration technique of the autoregressive distributed lag bounds test and vector error correction mechanism causality tests to determine the econometric relationship, using data for the period 1990–2012; the results support the conservation hypothesis for South Korea. The results of the autoregressive distributed lag bounds test show that renewable energy consumption has a negative effect on economic growth, and the results of a vector error correction mechanism causality tests indicate a unidirectional relationship from economic growth to renewable energy consumption. The empirical results imply that economic growth is a direct driver expanding renewable energy use. In terms of policy implications, it is best for policy makers to focus on overall economic growth rather than expanding renewable energy to drive economic growth.

The effect of renewable energy consumption on economic growth: Evidence from the renewable energy country attractive index

“…Economic growth causes capital. This empirical result is comparable with Koçak and Şarkgüneşi [26] for Albania; Lee and Jung [45] for South Korea; Kahia et al [72] for MENA countries; Rafindadi and Ozturk [11] for Germany; Apergis and Payne [22] for America; Apergis and Payne [23] for Eurasia; Apergis and Payne [20] for 80 economies; and Bhattacharya et al [5] for the case of top 38 countries.…”

“…Can and Korkmaz [44] reported the validation of bidirectional causality between renewable electricity output, as well as renewable energy consumption and economic growth in the case of Bulgaria during the period of 1990-2016. Lee and Jung [45] reported that renewable energy consumption has a significant but negative impact on economic growth.…”

Determinants of Renewable Energy Production: Do Intellectual Property Rights Matter?

“…As suggested by [23], this negative effect may mean greater dependency on traditional resources to generate energy. With respect to the role of GDP in renewable energy production, the findings reported a non-significant negative coefficient, which revealed a similar finding with [45][46][47]. Ref.…”

The impact of non-clean energy consumption on economic growth: Evidence from symmetric and asymmetric analyses in the US

“…The current study entered energy consumption in the production function, given that recent studies have used energy consumption as one of the important production inputs. 17,19,20,37 Therefore, the study uses the following model where ln y is the log-value of GDP per capita at a constant price (a proxy for economic growth (constant 2010 US$)); ln k is the log-value of capital per capita (gross fixed capital formation (constant 2010 US$)); ln cl _ ec and ln non _ ec are the log-values of clean and non-clean energy consumption (kg of oil equivalent per capita); ln fd is the log-value of real domestic credit to private sector per capital (a proxy for financial development (multiply current GDP price, divide by CPI price index, and then divide by population)); and μtis a term of stationary error. The variables ln y , ln k , and ln fd were obtained from the World Bank’s World Development Indicators.…”

“…19 used the ARDL model to indicate that energy conservation policies negatively impacted economic growth in Qatar. Lee and Jung 20 also applied the ARDL model to uncover that renewable energy consumption had a negative effect on South Korea’s economic growth. Additionally, they found a unidirectional relationship between economic growth and renewable energy consumption in the same country.…”