Exploring the economic and noneconomic determinants of investments in renewable energy

Uddin, Mohammed Gazi Salah; Hasan, Md. Bokh ia ; Pa k, Donghyun; Ali, Md.
Sumon; Wads öm, Ch is o e
Wo king Pape
Explo ing he economic and noneconomic de e minan s o
in es men s in enewable ene gy
ADB Economics Wo king Pape Se ies, No. 740
P o ided in Coope a ion wi h:
Asian De elopmen Bank (ADB), Manila
Sugges ed Ci a ion: Uddin, Mohammed Gazi Salah; Hasan, Md. Bokh ia ; Pa k, Donghyun; Ali, Md.
Sumon; Wads öm, Ch is o e (2024) : Explo ing he economic and noneconomic de e minan s
o in es men s in enewable ene gy, ADB Economics Wo king Pape Se ies, No. 740, Asian
De elopmen Bank (ADB), Manila,
h ps://doi.o g/10.22617/WPS240406-2
This Ve sion is a ailable a :
h ps://hdl.handle.ne /10419/305386
S anda d-Nu zungsbedingungen:
Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen
Zwecken und zum P i a geb auch gespeiche und kopie we den.
Sie dü en die Dokumen e nich ü ö en liche ode komme zielle
Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich
machen, e eiben ode ande wei ig nu zen.
So e n die Ve asse die Dokumen e un e Open-Con en -Lizenzen
(insbesonde e CC-Lizenzen) zu Ve ügung ges ell haben soll en,
gel en abweichend on diesen Nu zungsbedingungen die in de do
genann en Lizenz gewäh en Nu zungs ech e.
Te ms o use:
Documen s in EconS o may be sa ed and copied o you pe sonal
and schola ly pu poses.
You a e no o copy documen s o public o comme cial pu poses, o
exhibi he documen s publicly, o make hem publicly a ailable on he
in e ne , o o dis ibu e o o he wise use he documen s in public.
I he documen s ha e been made a ailable unde an Open Con en
Licence (especially C ea i e Commons Licences), you may exe cise
u he usage igh s as speci ied in he indica ed licence.
h ps://c ea i ecommons.o g/licenses/by/3.0/igo/
ASIAN DEVELOPMENT BANK
ASIAN DEVELOPMENT BANK
6 ADB A enue, Mandaluyong Ci y
1550 Me o Manila, Philippines
www.adb.o g
Explo ing he Economic and Noneconomic De e minan s o In es men s
in Renewable Ene gy
This pape explo es he de e minan s o enewable ene gy in es men s along wi h o he economic
and noneconomic a iables in bo h de eloped and de eloping economies. The indings o his pape indica e
ha indus ial g ow h, en i onmen al axes, social globaliza ion, and clima e ulne abili y posi i ely in luence
enewable ene gy in es men s in de eloped economies, while in la ion and poli ical ins abili y ha e nega i e
impac s. In de eloping economies, en i onmen al axes, social globaliza ion, en i onmen al echnologies,
and clima e ulne abili y a e bene icial, while indus ial g ow h and oil p ices ha e ad e se e ec s.
These ac o s a e aluable in o ma ion o policymake s o c ea e speci ic s a egies o mee global
sus ainabili y goals.
Abou he Asian De elopmen Bank
ADB is commi ed o achie ing a p ospe ous, inclusi e, esilien , and sus ainable Asia and he Paci ic,
while sus aining i s e o s o e adica e ex eme po e y. Es ablished in 1966, i is owned by 68 membe s
—49 om he egion. I s main ins umen s o helping i s de eloping membe coun ies a e policy dialogue,
loans, equi y in es men s, gua an ees, g an s, and echnical assis ance.
EXPLORING THE ECONOMIC
AND NONECONOMIC
DETERMINANTS OF INVESTMENTS
IN RENEWABLE ENERGY
Gazi Salah Uddin, Md. Bokh ia Hasan, Donghyun Pa k, Md. Sumon Ali,
and Ch is o e Wads öm
ADB ECONOMICS
WORKING PAPER SERIES
NO. 740
Augus 2024
ASIAN DEVELOPMENT BANK
The ADB Economics Wo king Pape Se ies
p esen s esea ch in p og ess o elici commen s
and encou age deba e on de elopmen issues
in Asia and he Paci ic. The iews exp essed
a e hose o he au ho s and do no necessa ily
e lec he iews and policies o ADB o
i s Boa d o Go e no s o he go e nmen s
hey ep esen .
ADB Economics Wo king Pape Se ies
Explo ing he Economic and Noneconomic De e minan s
o In es men s in Renewable Ene gy
Gazi Salah Uddin, Md. Bokh ia Hasan,
Donghyun Pa k, Md. Sumon Ali,
and Ch is o e Wads öm
No. 740 | Augus 2024
Gazi Salah Uddin ([email p o ec ed])
is an associa e p o esso and Ch is o e Wads öm
(ch is o e .[email p o ec ed]) is a lec u e a Linköping
Uni e si y, Sweden. Md. Bokh ia Hasan (bokh ia _
[email protected] ) is an associa e p o esso a
he Islamic Uni e si y, Bangladesh. Donghyun Pa k
(dpa [email protected] g) is an economic ad iso a he
Economic Resea ch and De elopmen Impac ,
Asian De elopmen Bank. Md. Sumon Ali
([email p o ec ed].edu) is PhD s uden a he
Uni e si y o Texas a El Paso.
C ea i e Commons A ibu ion 3.0 IGO license (CC BY 3.0 IGO)
© 2024 Asian De elopmen Bank
6 ADB A enue, Mandaluyong Ci y, 1550 Me o Manila, Philippines
Tel +63 2 8632 4444; Fax +63 2 8636 2444
www.adb.o g
Some igh s ese ed. Published in 2024.
ISSN 2313-6537 (p in ), 2313-6545 (PDF)
Publica ion S ock No. WPS240406-2
DOI: h p://dx.doi.o g/10.22617/WPS240406-2
The iews exp essed in his publica ion a e hose o he au ho s and do no necessa ily e lec he iews and policies
o  he Asian De elopmen Bank (ADB) o i s Boa d o Go e no s o he go e nmen s hey ep esen .
ADB does no gua an ee he accu acy o he da a included in his publica ion and accep s no esponsibili y o any
consequence o hei use. The men ion o speci ic companies o p oduc s o manu ac u e s does no imply ha hey
a e endo sed o ecommended by ADB in p e e ence o o he s o a simila na u e ha a e no men ioned.
By making any designa ion o o e e ence o a pa icula e i o y o geog aphic a ea in his documen , ADB does no
in end o make any judgmen s as o he legal o o he s a us o any e i o y o a ea.
This publica ion is a ailable unde he C ea i e Commons A ibu ion 3.0 IGO license (CC BY 3.0 IGO)
h ps://c ea i ecommons.o g/licenses/by/3.0/igo/. By using he con en o his publica ion, you ag ee o be bound
by he e ms o his license. Fo a ibu ion, ansla ions, adap a ions, and pe missions, please ead he p o isions
and e ms o use a h ps://www.adb.o g/ e ms-use#openaccess.
This CC license does no apply o non-ADB copy igh ma e ials in his publica ion. I he ma e ial is a ibu ed
oano he sou ce, please con ac he copy igh owne o publishe o ha sou ce o pe mission o ep oduce i .
ADB canno be held liable o any claims ha a ise as a esul o you use o he ma e ial.
Please con ac pubsma ke [email protected] g i you ha e ques ions o commen s wi h espec o con en , o i you wish
oob ain copy igh pe mission o you in ended use ha does no all wi hin hese e ms, o o pe mission o use
heADB logo.
Co igenda o ADB publica ions may be ound a h p://www.adb.o g/publica ions/co igenda.
No es:
In his publica ion, “$” e e s o Uni ed S a es dolla s.
ADB ecognizes “China” as he People’s Republic o China.
ABSTRACT
Amid a shi ing global ene gy landscape d i en by conce ns abou clima e change and
ossil uel deple ion, he e is a heigh ened need o mo e owa d sus ainable ene gy
sou ces. Al hough he e has been a signi ican inc ease in in es men s in enewable
ene gy (RE) globally, he e is s ill a conside able sho all in achie ing sus ainabili y goals.
This s udy is he i s o explo e he de e minan s o RE in es men s, conside ing a ange
o impo an economic and noneconomic a iables. The esea ch employs a balanced
annual panel da ase co e ing 36 coun ies om 2000 o 2020. The indings indica e ha ,
in de eloped economies, indus ial g ow h, en i onmen al axes, social globaliza ion, and
clima e ulne abili y posi i ely in luence RE in es men s, while in la ion and poli ical
ins abili y ha e nega i e impac s. In de eloping economies, en i onmen al axes, social
globaliza ion, en i onmen al echnologies, and clima e ulne abili y a e bene icial, while
indus ial g ow h and oil p ices ha e ad e se e ec s. These ac o s a e signi ican o
policy, p o iding go e nmen s and policymake s wi h aluable in o ma ion o c ea e
speci ic s a egies o mee global sus ainabili y goals.
Keywo ds: enewable ene gy in es men s, economic and noneconomic ac o s,
de eloped and de eloping economies, panel da a es ima es
JEL codes: C33, F64, Q50, Q42

1. In oduc ion
Recen ly, he global ene gy landscape has unde gone p o ound ans o ma ions,
d i en by a combina ion o ac o s, such as g owing conce ns o e he nega i e impac s
o clima e change, diminishing ese es o ossil uels, he u gen need o cu down ca bon
emissions, and he inhe en ins abili y in he ma ke s o ossil ene gy (Kilinc-A a and
Dolma o 2023, Om i and Jabeu 2024). In his ega d, wo ld leade s ha e made
commi men s o lessen he use o ossil ene gy, acknowledging i s subs an ial con ibu ion
o global ca bon emissions, which, as es ima ed by he Uni ed Na ions (2024), accoun
o app oxima ely 90%. Escala ing ca bon emissions is a signi ican d i e o he cu en
clima e c isis, leading o widesp ead and se e e e ec s on he global ecosys em (Sil a
2008). We hus ind ou sel es in a si ua ion whe e ossil uel ese es a e con inuously
deple ing, and he ma ke s o ossil ene gy, pa icula ly oil and gas, ha e encoun e ed
signi ican u bulence in ecen yea s due o a ious geopoli ical, economic, and inancial
unce ain ies.
In ligh o hese challenges, he shi owa d sus ainable and enewable ene gy
sou ces has become c ucial on he global agenda. This ansi ion is essen ial o add ess
clima e change, en i onmen al deg ada ion, and he p essing issues o ene gy c ises and
socioeconomic dispa i ies. Despi e subs an ial global enewable ene gy (RE)
in es men s, cu en ly a ound $2 illion annually, he e is a signi ican gap compa ed o
he $5 illion yea ly in es men s ipula ed by he In e na ional Ene gy Agency (IEA) un il
2030, and beyond o 2050, o ne -ze o ca bon emissions (Lenae s, Tagliapie a, and
Wol 2021). This sho all pe sis s despi e widesp ead go e nmen al ini ia i es.
Unde s anding why enewable in es men s lag behind he necessa y le els o mee
global sus ainabili y a ge s is a c ucial and no well-explo ed opic. This s imula es us o
in es iga e he po en ial de e minan s a ec ing RE in es men s.
The ac o s in luencing RE in es men s a e complex, in ol ing a combina ion o
economic and noneconomic elemen s. P e ious s udies ha highligh aspec s such as
economic g ow h, go e nmen policies, subsidies, incen i es, en i onmen al axa ion,
and ossil uel p ices ha e a signi ican impac on addi ional RE capaci y, as no ed in
esea ch by Bou ce (2020) and Rajend an, K ishnaswamy, and Sub amaniam (2023).
Addi ionally, noneconomic ac o s such as globaliza ion, en i onmen al echnologies,
2
clima e ulne abili y, and poli ical ins abili y a e also ound o ha e an impac on RE
deploymen (Bou ce 2020; Rajend an, K ishnaswamy, and Sub amaniam 2023).
Fu he mo e, ecen s udies ha e also indica ed ha noneconomic ac o s, al hough hei
exac impac is no unanimously ag eed upon, could ha e a g ea e in luence on RE
capaci y deploymen han economic ac o s, as sugges ed in he esea ch by Bou ce
(2020) and Abban and Hasan (2021). This aises an impo an ques ion ha has ye o
be add essed—whe he hese ac o s in luence RE in es men s simila ly as hei impac
on RE capaci y deploymen . The ex en o which hese ac o s in luence in es men
decisions and whe he hey a y ac oss di e en le els o economic esilience emains
unclea . I is a ques ion wa an ing u he in es iga ions.
Fu he mo e, he di e ences in RE in es men s ac oss coun ies a e s iking
(Rebo edo 2015, Abban and Hasan 2021). As shown in Figu e 1, in es men s in clean
ene gy pe capi a a e no ably highe in de eloped economies compa ed o eme ging and
de eloping economies (excluding he People’s Republic o China [PRC]). E en wi hin his
con ex , i is impo an o no e ha he PRC’s in es men s alone signi ican ly su pass
hose o o he eme ging and de eloping coun ies. Acco ding o he IEA (2022), he PRC
led global clean ene gy in es men s in 2021 wi h $380 billion, ollowed by he Eu opean
Union a $260 billion and he Uni ed S a es a $215 billion. Hence, i appea s ha RE
in es men s a e g owing bu hei dis ibu ion ac oss coun ies is une en. Subs an ial
ba ie s con inue o exis , especially in eme ging and de eloping economies (Aza o a
and Jun 2021). Unde s anding hese dispa i ies and he ac o s behind hem is essen ial
o c a ing e ec i e policies aimed a inc easing RE in es men s and achie ing emissions
educ ion a ge s.
Despi e he ecognized impo ance o bo h economic and noneconomic
de e minan s o RE in es men s, p e ious esea ch in his domain has exhibi ed
limi a ions. Pas li e a u e p ima ily ocused on RE deploymen , measu ed by RE
consump ions o supply o sha e in o al ene gy o elec ici y, o iden i y in luencing ac o s
(Can Şene e al. 2018; Bou ce 2020; Rajend an, K ishnaswamy, and Sub amaniam
2023). The majo i y o ea lie s udies conside ed economic, en i onmen al, and ene gy-
ela ed ac o s o RE use, wi h ew s udies add essing poli ical, egula o y, and
demog aphic ac o s (Can Şene e al. 2018; Bou ce 2020; Rajend an, K ishnaswamy,
3
and Sub amaniam 2023). Mo eo e , he indings o hese s udies, pa icula ly on
noneconomic ac o s, ailed o p o ide obus consensus on he de e minan s o
enewable ene gy deploymen (Bou ce 2020, Abban and Hasan 2021).
Figu e 1: Pe -capi a Clean Ene gy In es men in Selec ed Regions, 2020-2022
PRC = People’s Republic o China.
Sou ce: In e na ional Ene gy Agency. 2022.
Wo ld Ene gy In es men 2022
.
Fu he mo e, p e ious s udies mainly ocused on he na ional le el, wi h an
emphasis on de eloped o eme ging economies like he PRC, Ge many, Uni ed S a es,
and Eu opean na ions, while o en neglec ing de eloping economies (Bou ce 2020). Only
a limi ed numbe o s udies ha e ocused on RE om an in es men pe spec i e, e en
hough RE in es men s, measu ed by ins alled capaci y, a e deemed a mo e app op ia e
measu e o RE de elopmen (Abban and Hasan 2021). Al hough in o ma i e, hese
s udies lack comp ehensi eness, o en examining only a limi ed numbe o ac o s and
employing con en ional me hodologies. Fo example, Abban and Hasan (2021) explo ed
he in luence o go e nmen sys ems (p esiden ial o pa liamen a y) on enewable ene gy
in es men s (measu ed by ins alled capaci y) ac oss 60 coun ies, e ealing signi ican
go e nmen na u e e ec s. Simila ly, using panel da a om 34 O ganisa ion o Economic
Co-ope a ion and De elopmen (OECD) coun ies and he 5 BRICS (B azil, he Russian
Fede a ion, India, he PRC, and Sou h A ica) coun ies, Kilinc-A a and Dolma o (2023)
employed ins alled capaci y as a measu e o RE in es men s, indica ing a a o able
412
491 525
264 269 298
40 42 44
0
100
200
300
400
500
600
2020 2021 2022
$ billion
Ad anced economies China Eme ging ma ke and de eloping economies
PRC
4
impac om economic g ow h, enewable policy, and esea ch and de elopmen
expendi u es.
Gi en he backg ound ou lined he e and conside ing he iden i ied gaps in he
exis ing li e a u e, his s udy aims o ho oughly in es iga e bo h economic and
noneconomic ac o s ha may in luence RE in es men s. This s udy conside s a balanced
annual panel da ase encompassing 36 coun ies o 21 yea s spanning om 2000 o
2020, u he di ided in o wo ca ego ies: 21 de eloped economies and 15 eme ging and
de eloping economies. This di ision is used o examine whe he he impac o sample
ac o s di e s be ween hese wo g oups. Se e al econome ic ools a e employed: Panel
Co ec ed S anda d E o s (PCSE), Feasible Gene alized Leas Squa es (FGLS), and
Panel Quan ile Reg ession (QR). The PCSE analysis e eals ha in de eloped
economies, ac o s like indus ial g ow h, en i onmen al ax e enue, social globaliza ion,
and clima e ulne abili y posi i ely a ec RE in es men s, while in la ion and poli ical
ins abili y nega i ely impac hem. Con e sely, in de eloping coun ies, en i onmen al ax
e enue, social globaliza ion, en i onmen al- ela ed echnologies, and clima e
ulne abili y posi i ely in luence RE in es men s, bu indus ial g ow h and oil p ices ha e
ad e se e ec s. These indings sugges RE in es men s a e shaped by a combina ion o
bo h economic and noneconomic ac o s, wi h clea dispa i ies be ween de eloped and
de eloping coun ies. Simila indings a e unea hed by FGLS model es ima ions.
The e o e, hese indings a e obus as u he alida ed by QR es ima es bu e idence a
no iceable a ia ion in esul s ac oss quan iles.
Ou s udy con ibu es signi ican ly o he ex an li e a u e in se e al key aspec s.
Fi s ly, i add esses a c i ical gap by ocusing on he de e minan s o RE in es men s,
b idging a subs an ial oid le by p io s udies ha p edominan ly concen a ed on RE
deploymen . By u ilizing ins alled capaci y as a p oxy o RE in es men s, his s udy aligns
wi h he o wa d-looking aspec s o in es men decisions, o e ing a mo e accu a e
measu e o RE de elopmen . Secondly, unlike ea lie esea ch, he s udy also ad ances
he unde s anding o RE in es men s by examining a b oade se o noneconomic ac o s,
such as social globaliza ion, en i onmen al echnologies, clima e ulne abili y, and
poli ical ins abili y, alongside adi ional economic a iables. Mo eo e , i ex ends beyond
he con en ional ocus on de eloped and eme ging economies by including de eloping
11
dis ibu ions wi h possible ou lie s, indica ing a de ia ion om no mal dis ibu ion.
Signi ican Ja que-Be a s a is ics u he con i m his non-no mali y.
Table 2: Resul s o Summa y S a is ics
Va iable
lnREI
lnIND
lnTR
lnIN
lnOP
lnGLO
lnERT
InVUL
PI
En i e
s
ample
Mean 3.957 25.669 9.007 0.803 4.022 4.243 4.654 -1.029 0.147
Maxi. 10.878 29.383 11.951 4.965 4.591 4.520 9.264 -0.608 1.760
Mini. -4.906 20.613 4.209 -5.323 3.228 3.163 -1.609 -1.410 -2.810
S.D. 3.182 1.499 1.592 1.119 0.435 0.261 2.355 0.175 0.886
Skew. -0.151 -0.343 -0.376 -0.890 -0.345 -1.437 -0.143 0.408 -0.806
Ku osis 2.251 3.894 2.385 5.910 1.955 4.864 2.479 2.683 3.155
JB 20.51*** 40.04*** 29.76*** 366.56*** 49.35*** 369.52*** 11.12*** 24.09*** 82.67***
De eloped economies
Mean 4.161 26.032 9.725 0.314 4.022 4.409 5.924 -1.143 0.622
Maxi. 9.830 28.941 11.951 4.965 4.591 4.520 9.264 -0.946 1.760
Mini. -4.906 24.068 6.211 -5.323 3.228 4.131 1.970 -1.410 -1.630
S.D. 2.999 1.168 1.188 1.049 0.435 0.073 1.681 0.102 0.601
Skew. -0.348 0.487 -0.481 -1.278 -0.345 -0.969 0.044 -0.058 -1.298
Ku osis 2.277 2.605 3.346 7.340 1.955 3.644 2.677 3.040 4.879
JB 18.51*** 20.33*** 19.22*** 466.16*** 28.79*** 76.58*** 2.05 0.28 188.76***
De eloping
economies
Mean 3.671 25.160 8.003 1.488 4.022 4.010 2.876 -0.868 -0.518
Maxi. 10.878 29.383 11.689 4.006 4.591 4.425 8.684 -0.608 1.070
Mini. -3.598 20.613 4.209 -1.671 3.228 3.163 -1.609 -1.040 -2.810
S.D. 3.406 1.747 1.544 0.815 0.435 0.251 1.985 0.123 0.787
Skew. 0.094 -0.231 0.245 -0.363 -0.345 -0.912 0.500 0.622 -0.601
Ku osis 2.257 3.242 2.193 4.488 1.955 3.847 3.413 2.075 2.998
JB 7.70** 3.58 11.68*** 35.95*** 20.56*** 53.09*** 15.36*** 31.56*** 18.94***
No es: ln is he na u al loga i hm. REI, IND, TR, IN, OP, GLO, ERT, VUL, and PI ep esen enewable
ene gy in es men , indus ial g ow h, en i onmen al ax e enue, in la ion a e, oil p ice, social globaliza ion,
en i onmen - ela ed echnology, clima e ulne abili y, and poli ical ins abili y, espec i ely. Max, Min, S.D.,
Skew, and JB indica e maximum, minimum, s anda d de ia ion, skewness, and Ja que-Be a ‘***,’ ‘**,’ and
‘*’ indica e he signi icance le els a 1%, 5%, and 10%, espec i ely.
Sou ce: Au ho s’ es ima es.
The co ela ion ma ix, p esen ed in Table 3, shows RE in es men s posi i ely and
signi ican ly co ela ed wi h mos a iables (excluding in la ion and clima e ulne abili y),
wi h s ong connec ions e iden . In la ion and clima e ulne abili y a e nega i ely
associa ed wi h mos a iables, while o he a iable pai s display posi i e
in e ela ionships.

12
Table 3: Co ela ion Ma ix
Va iables
lnREI
lnIND
lnTR
lnIN
lnOP
lnGLO
lnERT
InVUL
PI
lnREI 1.000
lnIND 0.143*** 1.000
lnTR 0.252*** 0.691*** 1.000
lnIN -0.177*** -0.172*** -0.311*** 1.000
lnOP 0.076** 0.051*** 0.070*** 0.033*** 1.000
lnGLO 0.089** 0.169*** 0.370*** -0.500*** 0.215*** 1.000
lnERT 0.253*** 0.747*** 0.816*** -0.432*** 0.135*** 0.559*** 1.000
InVUL
-0.008 -0.249*** -0.465*** 0.444*** -0.032 -0.823*** -0.536*** 1.000
PI 0.020 0.137*** 0.245*** -0.371*** -0.071* 0.632*** 0.398*** -0.575*** 1.000
No es: ‘***,’ ‘**,’ and ‘*’ indica e he signi icance le els a 1%, 5%, and 10%, espec i ely.
Sou ce: Au ho s’ es ima es.
4. Resul s and Analysis
4.1. C oss-sec ional Dependence, Slope Homogenei y Tes , and Panel Uni Roo
Analysis
Ini ially, he da ase is e alua ed o CSD, a equen issue in panel da a. CSD o en
a ises om common shocks, inc easing globaliza ion, economic in e connec ions among
na ions a egional and global le els, and o he unobse ed ac o s (Abban and Hasan
2021, Naz 2023). Iden i ying CSD in he sample da a is essen ial be o e conduc ing he
main analysis, as unadd essed CSD can lead o spu ious esul s (Abban and Hasan
2021). To add ess his, second-gene a ion me hods a e employed: he Pesa an (2004)
c oss-sec ional dependence (CD) es and he B eusch and Pagan (1980) Lag ange
Mul iplie (LM) es . These es s a e pa icula ly sui able when he numbe o ime pe iods
(T) is smalle han he numbe o c oss-sec ional uni s (N). In he da ase , T is smalle
han N. The esul s, summa ized in Table 4, show ha he null hypo hesis o no CSD is
ejec ed a he 1% le el o signi icance, hence, e idencing he p esence o c oss-sec ional
dependence in all da a se ies ac oss all samples, which implies ha a shock in one
coun y can sp ead o o he s.
13
Table 4: C oss-sec ional Dependence Analysis
Tes lnREI lnIND lnTR lnIN lnOP lnGLO lnERT InVUL PI
En i e sample
CD- es s 30.415*** 52.95** 30.29*** 115.02*** 37.70*** 65.91*** 109.48*** 57.58*** 15.15***
p- alue 0.000 0.023 0.000 0.000 0.000 0.000 0.000 0.000 0.000
B eusch-
Pagan LM
5498.39*** 7501.34*** 2467.29*** 13230.00*** 6989.12*** 5991.28*** 12009.98*** 7441.69*** 2504.23***
p- alue 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
De eloped
economies
CD- es s 31.728*** 19.95*** 36.70*** 25.76*** 66.40*** 62.84*** 47.25*** 25.82*** 11.25***
p- alue 0.000 0.023 0.000 0.000 0.000 0.000 0.000 0.000 0.000
B eusch-
Pagan LM
2006.78*** 2063.38*** 2565.19*** 1117.11*** 4410.00*** 3958.32*** 2432.74*** 2327.05*** 830.14***
p- alue 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
De
eloping
economies
CD- es s 5.95*** 40.83*** 4.46*** 5.42*** 46.95*** 45.27*** 18.89*** 31.79*** 3.63***
p- alue 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
B eusch-
Pagan LM
816.79*** 1688.98*** 1079.21*** 312.14*** 2205.00*** 2051.29*** 754.40*** 1349.67*** 426.43***
p- alue 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
No e: ‘***,’ and ‘**,’ indica e he signi icance le els a 1% and 5%, espec i ely.
Sou ce: Au ho s’ es ima es.
14
Table 5 p esen s he slope homogenei y es esul s. The ou comes e eal ha
slope homogenei y es s a e highly s a is ically signi ican a a 1% le el o each o he
h ee models. The e o e, he null hypo hesis o slope homogenei y will be u ned down
and i is concluded ha he slope coe icien s a e he e ogenous.
Table 5: The Es ima es o Slope Homogenei y Tes
Tes s a is ics
En i e
s
ample
De eloped
e
conomies
De eloping
e
conomies
Del a 14.106***
(0.000)
11.461***
(0.000)
2.782***
(0.005)
Adjus ed Del a
19.490***
(0.000)
15.836***
(0.000)
3.844***
(0.000)
No e: ‘***,’ ‘**,’ and ‘*’ indica e he signi icance le els a 1%, 5%, and 10%, espec i ely.
Sou ce: Au ho s’ es ima es.
Gi en he CSD issue in he panel da a, wo second-gene a ion uni oo es s a e
employed: The c oss-sec ional augmen ed Im, Pesa an, and Shin (CIPS) es and he
c oss-sec ional augmen ed Dickey-Fulle (CADF) es , bo h de eloped by Pesa an
(2007). These es s a e selec ed o he obus ness and consis ency hey o e ,
conside ing he speci ic cha ac e is ics o he da ase . No ably, in cases o CSD, he
con en ional Augmen ed Dickey-Fulle (ADF) es can p oduce un eliable esul s
(Pesa an 2007, Naz 2023).
The ou comes o bo h es s, as p esen ed in Table 6, indica e ha mos o he da a
se ies exhibi non-s a iona i y a hei le els o he en i e and seg ega ed samples.
Howe e , all se ies become s a iona y a he i s di e ence a he 1% le el o signi icance,
i.e., I(1).
15
Table 6: Resul s o Uni Roo Tes s
Va iables CIPS CADF
Le el Fi s Di e ence Le el Fi s Di e ence
En i e
s
ample
lnREI
-1.608 -3.785*** -1.638 -2.907***
lnIND -1.592 -2.916*** -1.353 -1.946*
lnTR -2.675*** -4.866*** -2.143*** -2.621***
lnIN -4.160 ** -4.160*** - 1.945 -2.708***
lnOP -1.580 -3.252*** -1.580 -3.252***
lnGLO -2.972*** -5.056*** -2.409*** -2.424***
lnERT -2.856*** -4.038*** -1.432 -2.027**
InVUL -1.314 -4.355*** -2.308 -3.145***
PI -1.357 -3.114*** -1.724 -2.910***
De eloped economies
lnREI
-1.482 -3.666*** -1.848 -2.447***
lnIND -1.391 -2.804*** -1.931 -2.609***
lnTR -1.587** -3.181*** -2.070* -2.416***
lnIN -2.217*** -4.925*** -2.126** -3.646
lnOP -1.580 -3.252*** -1.580 -3.252***
lnGLO -2.208*** -4.847*** -2.186** -3.476***
lnERT -1.362 -3.406*** -1.848 -2.447***
InVUL -1.136 -4.561*** -2.131** -3.154***
PI -2.058*** -4.680*** -1.838 -3.271***
De eloping economies
lnREI
-1.152 -3.408*** -0.760 -2.839***
lnIND -1.424 -3.032*** -1.057 -3.095***
lnTR -0.951 -2.521*** -2.323*** -2.553***
lnIN -2.349*** -4.907*** -2.385*** -3.408***
lnOP -1.580 -3.252*** -1.580 -3.252***
lnGLO -1.472 -4.819*** -2.569*** -3.649***
lnERT -2.442*** -5.030*** -2.468*** -3.998***
InVUL -1.570 -4.177*** -2.085 -3.063***
PI -1.674** -4.084*** -1.957 -2.990***
CADF = c oss-sec ional augmen ed Dickey-Fulle ; CIPS = c oss-sec ional augmen ed Im, Pesa an, and
Shin.
No e: ‘***,’ ‘**,’ and ‘*’ indica e he signi icance le els a 1%, 5%, and 10%, espec i ely.
Sou ce: Au ho s’ es ima es.
16
4.2. Resul s o Coin eg a ion Tes
Conside ing he p esence o CSD and s a iona i y issues in he panel da a, a
coin eg a ion es by Kao (1999) is employed. Al hough academic li e a u e o en
ecommends he Wes e lund (2007) coin eg a ion echnique in he p esence o CSD, i s
applica ion is no easible in his s udy due o he inclusion o mo e han six explana o y
a iables. The e o e, Kao’s (1999) es , widely acknowledged in he esea ch communi y
(Gengenbach, Palm, and U bain 2005), is chosen. This es p esen s se e al ad an ages
o e adi ional coin eg a ion es s. Kao’s (1999) es is no ably capable o handling bo h
I(0) and I(1) p ocesses and is obus e en wi h limi ed sample sizes. Addi ionally, i
e ec i ely add esses he CSD in da a (Kao 1999). The esul s, p esen ed in Table 7,
unanimously ejec he null hypo hesis o no coin eg a ion, indica ing a coin eg a ing
ela ionship among he a iables unde in es iga ion.
Table 7: The Es ima es o Panel Coin eg a ion Tes by Kao (1999)
Tes s a is ics En i e sample De eloped
e
conomies
De eloping
e
conomies
Augmen ed Dickey
-Fulle -2.242**
(0.013)
-3.220***
(0.001)
-1.442*
(0.074)
No e: ‘***,’ ‘**,’ and ‘*’ indica e he signi icance le els a 1%, 5%, and 10%, espec i ely.
Sou ce: Au ho s’ es ima es.
4.3. Resul s o PCSE Es ima es
This s udy employs he PCSE model o add ess he inhe en issues associa ed
wi h panel da a. This model, as ecognized in he li e a u e (e.g., Reed and Webb 2010,
Millo 2017, Adeleye e al. 2023), is pa icula ly obus in si ua ions wi h limi ed sample
size, pa icula ly whe e T is less han N. The PCSE analysis esul s in Table 8 show a
signi ican nega i e coe icien o indus ial g ow h ac oss he en i e sample and mo e
ma kedly in de eloping coun ies, sugges ing ha indus ial g ow h ad e sely a ec s RE
in es men s, especially in de eloping economies. This may be due o apid
indus ializa ion and economic g ow h in hese economies, la gely d i en by ex ensi e
p ima y ene gy u iliza ion (Khan and Majeed 2023). The subs an ial ene gy demands
esul ing om indus ial g ow h a e no immedia ely me by RE sou ces (Cado e and
Pado ano 2016), as RE p ojec s en ail subs an ial up on in es men cos s and ex ended

17
implemen a ion pe iods, dissuading hei adop ion in de eloping coun ies (Wo ld Bank
2024). Mo eo e , de eloping economies o en p io i ize apid economic de elopmen ,
d i en by indus ializa ion, o ackle socioeconomic challenges such as po e y,
unemploymen , and in as uc u e needs (Cagla and Askin 2023). This emphasis on
immedia e economic goals may esul in educed commi men o RE in es men s. The
indings pa ially align wi h Cado e and Pado ano (2016), who obse ed he nega i e
impac s o manu ac u ing on RE deploymen , and wi h Chen, Pina , and S engos (2021),
who no ed economic g ow h’s ad e se e ec on RE consump ion in less democ a ic
coun ies.
Con e sely, in de eloped economies, he esul s di e : indus ial g ow h posi i ely
co ela es wi h RE in es men s. De eloped economies, ha ing achie ed hei economic
a ge s, now ocus mo e on en i onmen al sus ainabili y and clima e change mi iga ion,
educing ossil uel dependence in line wi h global commi men s like he Pa is Ag eemen .
Mo eo e , hese coun ies ha e he necessa y echnology and in as uc u e o e ec i e
RE in eg a ion. Fac o s such as s ong en i onmen al egula ions, sus ainabili y
objec i es, accessible capi al, ad anced echnologies, and inc eased en i onmen al
consciousness collec i ely push indus ies owa d cleane ene gy sou ces. This makes
RE in es men s mo e iable and e icien . The indings concu wi h s udies by Yang e al.
(2019); Chen, Pina , and S engos (2021); and Kilinc-A a and Dolma o (2023), which all
epo a posi i e link be ween economic g ow h and RE consump ion.
Tu ning o he impac o en i onmen al ax e enue, he s udy inds a signi ican
and posi i e e ec on RE in es men s a he 5% signi icance le el ac oss all samples,
wi h a s onge coe icien obse ed in he sub-sample con aining de eloped economies.
This esul is consis en wi h expec a ions, as en i onmen al axes in e nalize he ex e nal
cos s o en i onmen al pollu ion and p o ide economic incen i es o indi iduals and
businesses o emb ace cleane echnologies and educe hei en i onmen al oo p in
(Sa pong e al. 2023). By axing ac i i ies such as ca bon emissions, pollu an s, and non-
enewable esou ce use, en i onmen al axes encou age a shi owa d mo e sus ainable
and en i onmen ally iendly beha io , while gene a ing e enue ha can be ein es ed
in en i onmen al conse a ion and sus ainable ini ia i es (Abban and Hasan 2021, Doğan
e al. 2022, Sa pong e al., 2023). The indings a e also in line wi h Fan, Li, and Yin (2019),
18
who unde sco e he a o able ole o en i onmen al axes in p omo ing g een
de elopmen . Ne e heless, he esul s di e om ce ain p e ious s udies, such as
Abban and Hasan (2021), who epo ed an insigni ican ela ionship be ween
en i onmen al ax and RE in es men s, albei wi h a posi i e di ec ion. Fu he mo e, he
indings challenge he esul s o Bashi e al. (2021), who obse ed a nega i e linkage
be ween en i onmen al ax and RE u iliza ion.
Con e sely, in la ion shows a nega i e impac on RE in es men s o bo h he
en i e sample and de eloped economies. In la ion’s de imen al in luence ope a es
p ima ily h ough wo mechanisms. Rising in la ion leads o inc eased in e es a es, hus
escala ing he cos o capi al (Cal h op 2022, Akan 2023). Addi ionally, in la iona y
condi ions con ibu e o widesp ead inc eases in p ices, including p ojec cos s, aising
he o al cos s o RE p ojec s. Secondly, in la ion b ings unce ain y o he business
en i onmen , de e ing in es men and inno a ion in he RE sec o (Akan 2023). This
eluc ance may be ela ed o he isks associa ed wi h he conside able up on cos s o
RE in es men s. Howe e , in de eloping coun ies, he esul s show no signi ican link
be ween in la ion and RE in es men s.
Rega ding oil p ices, a signi ican nega i e link wi h RE in es men s is ound
exclusi ely in samples om de eloping economies. This sugges s ha he ypical
subs i u ion e ec , whe e ising oil p ices lead o educed oil u iliza ion and inc eased RE
use, does no apply in hese de eloping coun ies (Salim and Ra iq 2012, Abban and
Hasan 2021, Mukh a o e al. 2022). In de eloping coun ies, ising oil p ices can s ain
budge s, lea ing ewe unds o RE p ojec s. The high ini ial cos s o RE in as uc u e
a e o en seen as p ohibi i e, especially compa ed o he immedia e a o dabili y o ossil
uels. Addi ionally, an inc ease in he p ice o one ossil uel may esul in he highe
u iliza ion o al e na i e uels. Fo example, he ise in gas p ices in 2021 led o a pa ial
shi back o coal o elec ici y gene a ion in some coun ies (Jalle -Maka ewicz 2021,
Gilly and Jø gensen 2022). These ac o s could accoun o he nega i e ela ionship
be ween oil p ices and RE in es men s in de eloping coun ies, aligning wi h indings by
Abban and Hasan (2021) and Mukh a o e al. (2022). In e es ingly, he oil p ice
coe icien lacks s a is ical signi icance o he en i e and de eloped economies samples,
sugges ing ha RE in es men s in hese na ions a e becoming less in luenced by oil
19
p ices. Ins ead, in de eloped economies, RE in es men s a e inc easingly mo i a ed by
in e na ional p essu e o p io i ize en i onmen al sus ainabili y and clima e change
mi iga ion, as highligh ed by Salim and Ra iq (2012) and Abban and Hasan (2021).
Fo noneconomic de e minan s, social globaliza ion signi ican ly and posi i ely
impac s RE in es men s in bo h de eloped and de eloping coun ies. Social globaliza ion
ac s as a ca alys o global en i onmen al awa eness and clima e change ecogni ion,
encou aging indi iduals, businesses, and go e nmen s o p e e cleane ene gy sou ces
o educe ca bon emissions (Sinha e al. 2020, Za a e al. 2020, U om e al. 2022).
Addi ionally, he in e connec edness and in o ma ion exchange p omo ed by social
globaliza ion enhance in e na ional collabo a ion in RE echnology and policy (U om e al.
2022), aiding he adop ion and in es men in hese echnologies. These esul s pa ly
align wi h Nan, Huo, and Lee (2023), who emphasized globaliza ion’s ole in ad ancing
RE adop ion.
Simila ly, a posi i e e ec o clima e ulne abili y on RE in es men s is obse ed
ac oss all samples, highligh ing he inc eased awa eness in bo h de eloped and
de eloping coun ies o hei suscep ibili y o clima e- ela ed challenges and isks. This
awa eness mo i a es hese coun ies o inc ease RE in es men s as a s a egic esponse
o mi iga e ca bon emissions and p oac i ely add ess clima e- ela ed h ea s. These
indings align wi h Wen e al. (2023), who also no ed a posi i e co ela ion be ween
physical ulne abili y and g een in es men s.
Acco dingly, en i onmen al- ela ed echnology also demons a es a posi i e
associa ion wi h RE in es men s o he o e all sample and de eloping coun ies. This
sugges s ha ad ancemen s in en i onmen al echnology a e associa ed wi h inc eased
RE in es men s. The unde lying a ionale is likely he ins umen al ole hese echnologies
ha e in imp o ing he iabili y and e iciency o RE solu ions (Sinha e al. 2020, Qin e al.
2021), leading o g ea e ene gy e iciency, lowe cos s, and enhanced eliabili y. These
ad ancemen s make RE p ojec s mo e economically iable and sus ainable (Sinha e al.
2020). These obse a ions a e somewha in line wi h Nosheen, Iqbal, and Abbasi (2021),
who highligh ed he impac o clima e change echnology on g een g ow h.
In con as , de eloped economies show a s a is ically insigni ican nega i e
ela ionship be ween en i onmen al- ela ed echnology and RE in es men s. This may
20
sugges a di e en dynamic in hese economies, pe haps due o al eady subs an ial
in es men s in RE in as uc u e and echnology, indica ing sec o al ma u i y. The ocus
in hese economies migh be on op imizing and main aining exis ing RE sys ems, no on
con inued expansion, hence he lack o a s a is ically signi ican posi i e co ela ion
be ween ongoing echnological ad ancemen s and u he RE in es men s.
Las ly, i is no ed ha poli ical ins abili y signi ican ly hampe s RE in es men s in
de eloped economies due o he isks and unce ain ies o uns able poli ical clima es.
De ia ions om p esumed poli ical s abili y in hese na ions can de e in es o s and
s akeholde s, as poli ical con lic s o policy changes add unp edic abili y o he business
en i onmen (Zhang e al. 2022, Wang e al. 2022). This unce ain y makes in es o s
wa y o commi ing o long- e m, capi al-in ensi e RE p ojec s wi h ex ended payback
pe iods. Wang e al. (2022) pa ially con i m his wi h hei indings o a nega i e link
be ween poli ical isk and RE u iliza ion.
Con e sely, in de eloping coun ies, poli ical ins abili y has an insigni ican , ye
posi i e, impac on RE in es men s. This indica es ha in less s able poli ical
en i onmen s, such ins abili y migh ac ually encou age RE in es men s. This
coun e in ui i e e ec could be due o e o s in hese coun ies o di e si y ene gy
sou ces and educe ossil uel eliance o ene gy secu i y and en i onmen al
sus ainabili y. Addi ionally, in e na ional aid and coope a ion p omo ing RE in hese
egions may alle ia e he nega i e impac o poli ical ins abili y on in es men s.
In summa y, he s udy’s analysis shows ha bo h economic and noneconomic
ac o s signi ican ly a ec RE in es men s, wi h he impac ’s di ec ion and signi icance
a ying depending on whe he coun ies a e de eloped o de eloping. Fo de eloped
economies, ac o s like indus ial g ow h, en i onmen al ax e enue, social globaliza ion,
and clima e ulne abili y posi i ely in luence RE in es men s, while in la ion and poli ical
ins abili y ac as de e en s. In con as , in de eloping coun ies, posi i e d i e s o RE
in es men s include en i onmen al ax e enue, social globaliza ion, en i onmen al-
ela ed echnologies, and clima e ulne abili y, while indus ial g ow h and oil p ices
nega i ely a ec hese in es men s. These esul s highligh he complex in e play o
a ious ac o s on RE in es men s ac oss di e en na ional con ex s, enhancing
unde s anding o he di e se dynamics in he RE sec o .
27
REFERENCES
Abban, Abdul Rashid, and Mohammad Zahid Hasan. 2021. “Re isi ing he De e minan s
o Renewable Ene gy In es men -New E idence om Poli ical and Go e nmen
Ideology.” Ene gy Policy, 151: 112184.
Adeleye, Bosede Ngozi, Da ling on Akam, Nasi u Inuwa, Hen y Tumba James, and Denis
Basila. 2023. “Does Globaliza ion and Ene gy Usage In luence Ca bon Emissions
in Sou h Asia? An Empi ical Re isi o he Deba e.” En i onmen al Science and
Pollu ion Resea ch, 30 (13): 36190–36207.
Akan, Tane . 2023. “Can Renewable Ene gy Mi iga e he Impac s o In la ion and Policy
In e es on Clima e Change?” Renewable Ene gy, 214: 255–289.
Ak am, Rabia, Fuzhong Chen, Fahad Khalid, Zhiwei Ye, and Muhammad Ta iq Majeed.
2020. “He e ogeneous E ec s o Ene gy E iciency and Renewable Ene gy on
Ca bon Emissions: E idence om De eloping Coun ies.” Jou nal o Cleane
P oduc ion, 247: 119122.
Alam, Md. Samsul, Sudha shan Reddy Pa ama i, Muhammad Shahbaz, and Mi a
Bha acha ya. 2015. “Dynamics o Na u al Gas Consump ion, Ou pu and T ade:
Empi ical E idence om he Eme ging Economies.” Discussion Pape Se ies
21/15. Monash Uni e si y, Depa men o Economics.
Aza o a, Eka e ina, and Hannah Jun. 2021. “In es iga ing De e minan s o In e na ional
Clean Ene gy In es men s in Eme ging Ma ke s.” Sus ainabili y, 13 (21): 11843.
Bha acha ya, Mi a, Sudha shan Reddy Pa ama i, Ilhan Oz u k, and Sanka
Bha acha ya. 2016. “The E ec o Renewable Ene gy Consump ion on Economic
G ow h: E idence om Top 38 Coun ies.” Applied Ene gy, 162: 733–741.
Bou ce , Clémence. 2020. “Empi ical De e minan s o Renewable Ene gy Deploymen : A
Sys ema ic Li e a u e Re iew.” Ene gy Economics, 85: 104563.
Buckley, Tim, and Sau abh T i edi. 2021. “Global In es o s A e Mo ing Away om he
Massi e Clima e-Rela ed Risks Associa ed wi h Fossil Fuels.” Ins i u e o Ene gy
Economics & Financial Analysis. 19 July. h ps://iee a.o g/a icles/global-in es o s-
a e-mo ing-away-massi e-clima e- ela ed- isks-associa ed- ossil- uels.
Cado e , Isabelle, and Fabio Pado ano. 2016. “The Poli ical D i e s o Renewable Ene gy
Policies.” Ene gy Economics, 56: 261–269.
Cagla , Abdullah E., and Beki Em e Askin. 2023. “A Pa h Towa ds G een Re olu ion:
How Do Compe i i e Indus ial Pe o mance and Renewable Ene gy Consump ion
In luence En i onmen al Quali y Indica o s?” Renewable Ene gy, 205: 273–280.

28
Cal h op, Edwa d. 2022. “Ene gy C isis Makes Public Banks E en Mo e Impo an .”
Eu opean In es men Bank. 11 No embe . h ps://www.eib.o g/en/s o ies/ene gy-
c isis-ne -ze o- ansi ion.
Cama e o, Ma iam, and Cecilio Tama i . 2002. “A Panel Coin eg a ion App oach o he
Es ima ion o he Pese a Real Exchange Ra e.” Jou nal o Mac oeconomics, 24
(3): 371–393.
Can Şene , Şe i e Eli , Julia L. Sha p, and Annick Anc il. 2018. “Fac o s Impac ing
Di e ging Pa hs o Renewable Ene gy: A Re iew.” Renewable and Sus ainable
Ene gy Re iews, 81: 2335–2342.
Chen, Chaoyi, Mehme Pina , and Thanasis S engos. 2021. “De e minan s o Renewable
Ene gy Consump ion: Impo ance o Democ a ic Ins i u ions.” Renewable Ene gy,
179: 75–83.
Doğan, Buha i, Lan Khanh Chu, Sudeshna Ghosh, Huong Hoang Diep T uong, and
Daniel Balsalob e-Lo en e. 2022. “How En i onmen al Taxes and Ca bon
Emissions A e Rela ed in he G7 Economies?” Renewable Ene gy, 187: 645–656.
Fan, Xinghua, Xuxia Li, and Jiuli Yin. 2019. “Impac o En i onmen al Tax on G een
De elopmen : A Nonlinea Dynamical Sys em Analysis.” PLOS ONE, 14 (9):
e0221264.
Gal ao, An onio F. 2011. “Quan ile Reg ession o Dynamic Panel Da a wi h Fixed
E ec s.” Jou nal o Econome ics, 164 (1): 142–157.
Gengenbach, Ch is ian, F anz C. Palm, and Jean-Pie e U bain. 2005. “Panel
Coin eg a ion Tes ing in he P esence o Common Fac o s.” Depa men o
Quan i a i e Economics, Uni e si ei Maas ich .
Gilly, Pa ick, and Pe Jø gensen. 2022. “Wha Do Rising Ene gy P ices Mean o he
G een Ene gy T ansi ion?” Ramboll. 27 Ap il.
h ps://www. amboll.com/insigh s/deca bonise- o -ne -ze o/wha -do- ising-
ene gy-p ices-mean- o - he-g een-ene gy- ansi ion.
Gu ie ez, Luciano. 2003. “On he Powe o Panel Coin eg a ion Tes s: A Mon e Ca lo
Compa ison.” Economics Le e s, 80 (1): 105–111.
Gygli, Sa ina, Flo ian Haelg, Niklas Po a ke, and Jan-Egbe S u m. 2018 The KOF
Globalisa ion Index—Re isi ed. CESi o Wo king Pape No. 7430. Cen e o
Economic S udies.
Hasan, Md. Bokh ia , Md. Sumon Ali, Gazi Salah Uddin, Masnun Al Mahi, Yang Liu, and
Donghyun Pa k. 2022. “Is Bangladesh on he Righ Pa h owa d Sus ainable
29
De elopmen ? An Empi ical Explo a ion o Ene gy Sou ces, Economic G ow h,
and CO2 Discha ges Nexus.” Resou ces Policy, 79: 103125.
In e na ional Ene gy Agency (IEA). 2022. Wo ld Ene gy In es men 2022.
h ps://iea.blob.co e.windows.ne /asse s/b0beda65-8a1d-46ae-87a2-
95947ec2714/Wo ldEne gyIn es men 2022.pd .
Jalle -Maka ewicz, Ana Ma ia. 2021. “As Fossil Fuel P ices Sky ocke Globally,
Renewables G ow S eadily Cheape .” Ins i u e o Ene gy Economics and
Financial Analysis. 27 Sep embe . h ps://iee a.o g/ esou ces/ ossil- uel-p ices-
sky ocke -globally- enewables-g ow-s eadily-cheape .
Kao, Chihwa. 1999. “Spu ious Reg ession and Residual-Based Tes s o Coin eg a ion in
Panel Da a.” Jou nal o Econome ics, 90 (1): 1–44.
Khan, She , and Muhammad Ta iq Majeed. 2023. “Towa d Economic G ow h wi hou
Emissions G ow h: The Role o U baniza ion and Indus ializa ion in Pakis an.”
Jou nal o En i onmen al S udies and Sciences, 13 (1): 43–58.
Kilinc-A a, Nu can, and Ilya A. Dolma o . 2023. “Which Fac o s In luence he Decisions
o Renewable Ene gy In es o s? Empi ical E idence om OECD and BRICS
Coun ies.” En i onmen al Science and Pollu ion Resea ch, 30 (1): 1720–1736.
Kim, Jeayoon, and Kwangwoo Pa k. 2016. “Financial De elopmen and Deploymen o
Renewable Ene gy Technologies.” Ene gy Economics, 59: 238–250.
Koenke , Roge . 2004. “Quan ile Reg ession o Longi udinal Da a.” Jou nal o
Mul i a ia e Analysis, 91 (1): 74–89.
Le, Thai-Ha, and Canh Phuc Nguyen. 2019. “Is Ene gy Secu i y a D i e o Economic
G ow h? E idence om a Global Sample.” Ene gy Policy, 129: 436–451.
Lenae s, Klaas, Simone Tagliapie a, and Gun am B. Wol . 2021. “How Much
In es men Do We Need o Reach Ne Ze o?” B uegel-Blogs. 25 Augus .
h ps://www.b uegel.o g/blog-pos /how-much-in es men -do-we-need- each-ne -
ze o.
Masini, And ea, and Emanuela Meniche i. 2013. “In es men Decisions in he Renewable
Ene gy Sec o : An Analysis o Non- inancial D i e s.” Technological Fo ecas ing
and Social Change, 80 (3): 510–524.
Millo, Gio anni. 2017. “Robus S anda d E o Es ima o s o Panel Models: A Uni ying
App oach.” Jou nal o S a is ical So wa e, 82: 1–27.
30
Mukh a o , Shah iya , Jeyhun I. Mikayilo , Shahin Maha amo , Ja id Aliye , and Elchin
Suleymano . 2022. “Highe Oil P ices, A e They Good o Bad o Renewable
Ene gy Consump ion: The Case o I an?” Renewable Ene gy, 186: 411–419.
Nan, Shijing, Yuchen Huo, and Chien-Chiang Lee. 2023. “Assessing he Role o
Globaliza ion on Renewable Ene gy Consump ion: New E idence om a Spa ial
Econome ic Analysis.” Renewable Ene gy, 215: 118974.
Naz, Ayesha. 2023. “Linkages be ween Di e en Types o Globaliza ion and Socio-
Economic Va iables: Panel Da a Analysis o 129 Coun ies.” Jou nal o Economic
S uc u es, 12 (1): 1–23.
Nosheen, Misbah, Ja ed Iqbal, and Muhammad Ali Abbasi. 2021. “Do Technological
Inno a ions P omo e G een G ow h in he Eu opean Union?” En i onmen al
Science and Pollu ion Resea ch, 28: 21717–21729.
Om i, Anis, and Sami Ben Jabeu . 2024. “Clima e Policies and Legisla ion o Renewable
Ene gy T ansi ion: The Roles o Financial Sec o and Poli ical Ins i u ions.”
Technological Fo ecas ing and Social Change, 203: 123347.
Qin, Lingui, De is Ki ikkaleli, Yao Hou, Xu Miao, and Muhammad Tu ail. 2021. “Ca bon
Neu ali y Ta ge o G7 Economies: Examining he Role o En i onmen al Policy,
G een Inno a ion and Composi e Risk Index.” Jou nal o En i onmen al
Managemen , 295: 113119.
Pesa an, M. Hashem. 2004. Gene al Diagnos ic Tes s o C oss Sec ion Dependence in
Panels. Camb idge Wo king Pape in Economics 0435. Uni e si y o Camb idge.
Pesa an, M. Hashem. 2007. “A Simple Panel Uni Roo Tes in he P esence o C oss-
Sec ion Dependence.” Jou nal o Applied Econome ics, 22 (2): 265–312.
Rajend an, Raji ha, Jaya aman K ishnaswamy, and Na a Sub amaniam. 2023.
“Dynamics o Mac o-Economic Fac o s o Ene gy T ansi ion and I s Re iews—A
Concep ual F amewo k o G7 Coun ies.” Renewable and Sus ainable Ene gy
Re iews, 187: 113692.
Rebo edo, Juan C. 2015. “Renewable Ene gy Con ibu ion o he Ene gy Supply: Is The e
Con e gence ac oss Coun ies?” Renewable and Sus ainable Ene gy Re iews,
45: 290–295.
Reed, William Robe , and Rachel Webb. 2010. “The PCSE Es ima o Is Good—Jus No
as Good as You Think.” Jou nal o Time Se ies Econome ics, 2 (1).
Salim, Ruhul A., and Shuddhasa wa Ra iq. 2012. “Why Do Some Eme ging Economies
P oac i ely Accele a e he Adop ion o Renewable Ene gy?” Ene gy Economics,
34 (4): 1051–1057.
31
Salman, Ve da, Im iaz Ahmad, and Shahzad Al i. 2023. “Is Globaliza ion D i ing he Use
o Renewable Ene gy? A Global Mac o Pe spec i e.” P oblemy Eko ozwoju
P oblems o Sus ainable De elopmen , 18 (1): 68–80.
Sa pong, Kwabena Agya ko, Wanzhen Xu, B igh Akwasi Gyam i, and El is Kwame O o i.
2023. ”Can En i onmen al Taxes and G een-Ene gy O e Ca bon-F ee E7
Economies? An Empi ical Analysis in he F amewo k o COP-26.” En i onmen al
Science and Pollu ion Resea ch, 30 (18): 51726–51739.
Shahbaz, Muhammad, Chinazaekpe e Nwani, Fes us Vic o Bekun, B igh Akwasi
Gyam i, and Di ine Q. Agozie. 2022. “Disce ning he Role o Renewable Ene gy
and Ene gy E iciency in Finding he Pa h o Cleane Consump ion and P oduc ion
Pa e ns: New Insigh s om De eloping Economies.” Ene gy, 260: 124951.
Sil a, Ca los Edua do To es. 2008. “Fac o s In luencing he De elopmen o Local
Renewable Ene gy S a egies: The Cases o Lolland and Samsø Islands in
Denma k.” Lund Uni e si y Cen e o Sus ainabili y S udies.
Sinha, A ik, Tuhin Sengup a, and Ra ael Al a ado. 2020. “In e play be ween
Technological Inno a ion and En i onmen al Quali y: Fo mula ing he SDG
Policies o Nex 11 Economies.” Jou nal o Cleane P oduc ion, 242: 118549.
Uni ed Na ions. 2024. Causes and E ec s o Clima e Change.
h ps://www.un.o g/en/clima echange/science/causes-e ec s-clima e-change.
U om, Ch is ian, Ilyes Abid, Khaled Guesmi, and Gideon Ndubuisi. 2022. “Renewable
Ene gy Consump ion, Globaliza ion, and Economic G ow h Shocks: E idence
om G7 Coun ies.” The Jou nal o In e na ional T ade & Economic De elopmen ,
31 (2): 204–232.
Van Song, Nguyen, Nguyen Dang Que, Nguyen Cong Tiep, Dinh an Tien, Thai Van Ha,
Pham Thi Lin Phuong, T an Ba Uan, and Thai Thi Kim Oanh. 2023. “The In luence
o Economic and Non-economic De e minan s on he Sus ainable Ene gy
Consump ion: E idence om Vie nam Economy.” En i onmen al Science and
Pollu ion Resea ch, 30 (14): 42282–42295.
Wang, E hong, Gi ay Gozgo , Man u Kuma Mahalik, Gup eswa Pa el, and Guoheng Hu.
2022. “E ec s o Ins i u ional Quali y and Poli ical Risk on he Renewable Ene gy
Consump ion in he OECD Coun ies.” Resou ces Policy, 79: 103041.
Wen, Jun, Sen Zhang, Chun-Ping Chang, Donni Faja Anug ah, and Yoga A andi. 2023.
“Does Clima e Vulne abili y P omo e G een In es men unde Ene gy Supply
Res ic ion?” Ene gy Economics, 124: 106790.
Wes e lund, Joakim. 2007. “Tes ing o E o Co ec ion in Panel Da a.” Ox o d Bulle in
o Economics and S a is ics, 69 (6): 709–748.
32
Wo ld Bank. 2024. Ene gy. h ps://www.wo ldbank.o g/en/ opic/ene gy/o e iew.
Yang, Xiaolei, Lingyun He, Yu ei Xia, and Yu eng Chen. 2019. “E ec o Go e nmen
Subsidies on Renewable Ene gy In es men s: The Th eshold E ec .” Ene gy
Policy, 132: 156–166.
Za a , Muhammad Wasi , Muhammad Shahbaz, A ik Sinha, Tuhin Sengup a, and
Quande Qin. 2020. “How Renewable Ene gy Consump ion Con ibu e o
En i onmen al Quali y? The Role o Educa ion in OECD Coun ies.” Jou nal o
Cleane P oduc ion, 268: 122149.
Zhang, Wenwen, Yi-Bin Chiu, and Cody Yu-Ling Hsiao. 2022. “E ec s o Coun y Risks
and Go e nmen Subsidies on Renewable Ene gy Fi ms’ Pe o mance: E idence
om China.” Renewable and Sus ainable Ene gy Re iews, 158: 112164.

ASIAN DEVELOPMENT BANK
ASIAN DEVELOPMENT BANK
6 ADB A enue, Mandaluyong Ci y
1550 Me o Manila, Philippines
www.adb.o g
Explo ing he Economic and Noneconomic De e minan s o In es men s
in Renewable Ene gy
This pape explo es he de e minan s o enewable ene gy in es men s along wi h o he economic
and noneconomic a iables in bo h de eloped and de eloping economies. The indings o his pape indica e
ha indus ial g ow h, en i onmen al axes, social globaliza ion, and clima e ulne abili y posi i ely in luence
enewable ene gy in es men s in de eloped economies, while in la ion and poli ical ins abili y ha e nega i e
impac s. In de eloping economies, en i onmen al axes, social globaliza ion, en i onmen al echnologies,
and clima e ulne abili y a e bene icial, while indus ial g ow h and oil p ices ha e ad e se e ec s.
These ac o s a e aluable in o ma ion o policymake s o c ea e speci ic s a egies o mee global
sus ainabili y goals.
Abou he Asian De elopmen Bank
ADB is commi ed o achie ing a p ospe ous, inclusi e, esilien , and sus ainable Asia and he Paci ic,
while sus aining i s e o s o e adica e ex eme po e y. Es ablished in 1966, i is owned by 68 membe s
—49 om he egion. I s main ins umen s o helping i s de eloping membe coun ies a e policy dialogue,
loans, equi y in es men s, gua an ees, g an s, and echnical assis ance.
EXPLORING THE ECONOMIC
AND NONECONOMIC
DETERMINANTS OF INVESTMENTS
IN RENEWABLE ENERGY
Gazi Salah Uddin, Md. Bokh ia Hasan, Donghyun Pa k, Md. Sumon Ali,
and Ch is o e Wads öm
ADB ECONOMICS
WORKING PAPER SERIES
NO. 740
Augus 2024