The Impact of Renewable Energy Consumption, Co₂ Emissions, and Foreign Direct Investment on Economic Growth in Industrialised Countries
Keywords:
Renewable energy consumption, CO₂ emissions, foreign direct investment, economic growth, clean energy transition, sustainable development, SDGs
Abstract
Energy plays a crucial role in supporting global economic growth and development. However, dependence on fossil fuels such as coal, oil, and natural gas presents long-term challenges, including environmental degradation and resource depletion. This study investigates the influence of renewable energy consumption, CO₂ emissions, and foreign direct investment (FDI) on economic growth across ten industrialised nations between 2002 and 2021. Using a panel data regression approach comprising Pooled Least Squares, Fixed Effects, and Random Effects models the research integrates time-series and cross-sectional data. Empirical results indicate that all three independent variables significantly affect economic growth. Notably, renewable energy consumption demonstrates the most substantial positive impact, reinforcing the role of clean energy transition in promoting sustainable development. CO₂ emissions, though generally linked with negative externalities, are positively correlated with growth, particularly in economies undergoing industrialisation. FDI also contributes meaningfully by facilitating technology transfer and enhancing productivity. Collectively, these variables explain approximately 73% of the variation in economic growth, affirming the model’s robustness. The findings underscore the necessity of cohesive energy, environmental, and investment policies to drive sustainable economic strategies. The study highlights the urgency of accelerating the clean energy transition while addressing inequality in energy access, especially in developing regions, as a critical pathway to achieving the 2030 Sustainable Development Goals (SDGs)
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Published
2025-07-14
How to Cite
Fachry Prabowo, M., Etty Soesilowati, & Agus Sumanto. (2025). The Impact of Renewable Energy Consumption, Co₂ Emissions, and Foreign Direct Investment on Economic Growth in Industrialised Countries. International Journal of Economics, Business and Innovation Research, 4(04), 1234-1262. https://doi.org/10.63922/ijebir.v4i04.2073
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