Renewable and non-renewable energy, regime type and economic growth

The paper analyses the effect of renewable and non-renewable energy consumption as well as the regime type on economic growth in 30 Sub-Saharan African (SSA) countries over the period 1980-2012. Using heterogeneous panel cointegration and panel-based error correction tests, we find long-run relationship between the variables. However, short-run results are not robust, which suggest that energy sector investments are long-term in nature. Specifically, the results show that while both renewable and non-renewable energy have significant positive effect on economic growth, non-renewable energy has a greater growth enhancing effect than renewable energy. A 10% increase in renewable energy consumption is associated with an increase in economic growth by 0.27%, while a 10% increase in non-renewable energy consumption leads to an increase in growth by 2.11% ceteris paribus. Further, the findings of the study show that democratic states experience higher growth rates than autocratic states.