The Impact of Renewable Energy Consumption and Institution Quality on Economic Growth in Sub-Saharan Africa Countries

Abstract

This paper investigates how renewable energy consumption impacts economic growth in Sub-Saharan Africa (SSA). In order to further enrich the debate around renewable energy policy direction and its corresponding effects on growth, we examine the interaction effect of renewable energy consumption and institutions quality on growth. In doing so, panel data set were collected for a sample of 45 SSA countries covering the period 1990-2020. The study employed a dynamic panel estimation technique with a view of evaluating the relative impact of the renewable energy consumption on growth. The results revealed that renewable energy consumption alone has very little impact on growth performance in SSA. However, the simultaneous interaction of renewable energy consumption with institutions quality brings about positive and significant impact on growth. This confirmed that the positive impact of renewable energy consumption on growth is conditional on the quality of institutions, especially as it relates to, government effectiveness, control of corruption, the rule of law and the regulatory quality. For policy, our results imply that governments in SSA should first strengthen their institutions while adopting gradual approach to green energy policies.

Keywords: Renewable energy consumption, Institutions Quality, Economic Growth, Sub-Saharan Africa

DOI: 10.7176/JESD/13-16-02

Publication date:August 31^st 2022