Criticality of sustainable research and development-led growth in EU: the role of renewable and non-renewable energy

Abstract

The path to sustainable economic growth and development has preoccupied most economies and the European Union (EU) member countries is no exception. Thus, the current study is aimed at revisiting the energy-induced growth by disaggregating energy consumption into (renewable and non-renewable energy consumption) as means of growth. Also, the role of research and development (R&D) in the attainment of sustainable growth in the panel of EU countries over the period 1997-2014 is examined. Accordingly, the preliminary investigation revealed a significant evidence of cointegration in the panel of estimated variables. The study also expectedly suggests that 1% increase in non-renewable energy consumption, renewable energy consumption, and R &D in the long-run is responsible for a respective increase of 0.60%, 0.13%, and 0.05 in the panel countries growth. Furthermore, the causality evidence from renewable energy consumption to economic growth is not only significant but is observed in more countries than the causality from non-renewable energy consumption to economic growth. Thus, it implies that the commitment to sustainable growth and climate actions of the EU countries is fact yielding desirable outcome. Similarly, research development is observed to play a significant and causality impact on the economic growth of the panel countries. In general, the study posits an interesting and a potentially effective policy outlook and economic perspective for the bloc countries.