Renewable energy and sustainable development: Evidence from lower middle-income countries

Abstract

Research background: Renewable energy (REN) is considered a crucial part of building a foundation for sustainable development (SUD) and is a solution to many environmental and social challenges that countries around the world are facing. In lower-middle-income countries (LMICs), the increasing energy demand, coupled with the pressure to mitigate environmental impacts, has created favorable conditions for transitioning to sustainable energy sources. However, this process faces numerous barriers, including limitations in financial resources, technology, and infrastructure. To overcome these challenges, it is essential to understand the role and impact of REN on various aspects of SUD in this group of countries.

Purpose of the article: This study aims to analyze the impact of REN on SUD in LMICs while examining the influence of nonrenewable energy and other socioeconomic factors.

Methods: The study employs the ordinary least squares (OLS) method, the random effects model (REM), the fixed effects model (FEM), and the generalized method of moments (GMM) estimation technique. Data for 51 LMICs were collected from the World Development Indicators (WDI) database of the World Bank and the International Energy Agency (IEA).

Findings & value added: REN contributes positively to SUD. However, in some countries, fossil fuels remain integral to economic development, as REN sources have yet to fully replace them. Furthermore, socioeconomic factors such as economic growth, education, and urbanization also affect SUD in LMICs. This finding reinforces and expands prior studies by clarifying the dual role of REN in promoting economic growth and mitigating environmental pollution among LMICs. This subject has received limited attention in the existing literature. Concurrently, this finding provides a scientific basis for policy formulation, investment orientation, and the modernization of energy systems, aimed at building long-term SUD strategies.

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Keywords

growth economic, enterprise sustainability, panel data analysis, renewable energy, sustainable development

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