Exploring the Drivers of Renewable Energy Consumption: The Roles of Innovation, Financial Globalization, and Uncertainty in Next-11 Countries

Year 2026, Volume: 11 Issue: 1 , 120 - 139 , 31.03.2026

Ayşegül Özkan

https://doi.org/10.30784/epfad.1820631

https://izlik.org/JA45XG79BB

Abstract

The primary aim of this study is to comprehensively analyze the economic, financial, and technological dynamics shaping renewable energy consumption in the Next-11 countries. In this context, the effects of technological innovation, the financial globalization index, the world uncertainty index, and trade openness variables on renewable energy consumption are examined. Using data covering the period 1990-2021, the analysis was conducted through the Common Correlated Effects (CCE) method. The results indicate that technological innovation and global uncertainty negatively affect renewable energy consumption, whereas financial globalization increases the use of renewable energy. The findings suggest that structural and institutional constraints, limited access to technology, and investment risks arising from uncertainty restrict the renewable energy transition. Conversely, financial integration facilitates international capital flows and supports clean energy investments. The results of this research are significant for policymakers aiming to accelerate the energy transition and for financial institutions seeking to promote sustainable investments.

Keywords

Renewable Energy , Technological Innovation , Financial Globalization , Uncertainty , Next-11 Countries

Yenilenebilir Enerji Tüketimini Etkileyen Faktörlerin Analizi: Next-11 Ülkelerinde İnovasyon, Finansal Küreselleşme ve Belirsizliğin Rolleri

https://izlik.org/JA45XG79BB

Abstract

Bu çalışmanın temel amacı, Next-11 ülkelerinde yenilenebilir enerji tüketimini şekillendiren ekonomik, finansal ve teknolojik dinamikleri kapsamlı biçimde analiz etmektir. Bu doğrultuda, teknolojik inovasyon, finansal küreselleşme endeksi, küresel belirsizlik endeksi ve ticaret açıklığı değişkenlerinin yenilenebilir enerji tüketimi üzerindeki etkileri incelenmiştir. 1990-2021 dönemine ait veriler kullanılarak Common Correlated Effects (CCE) yöntemiyle gerçekleştirilen analizde, teknolojik inovasyon ve küresel belirsizlik değişkenlerinin yenilenebilir enerji tüketimini olumsuz etkilediği; buna karşın finansal küreselleşmenin yenilenebilir enerji kullanımını artırdığı belirlenmiştir. Bulgular, yapısal ve kurumsal sınırlılıkların, teknolojiye erişim zorluklarının ve belirsizlik kaynaklı yatırım risklerinin yenilenebilir enerji dönüşümünü kısıtladığını göstermektedir. Buna karşılık, finansal entegrasyonun uluslararası sermaye akışlarını kolaylaştırarak temiz enerji yatırımlarını desteklediği görülmektedir. Araştırmadan elde edilecek sonuçlar, enerji dönüşümünü hızlandırmayı hedefleyen politika yapıcılar ile sürdürülebilir yatırımlara yönelen finansal kuruluşlar açısından önem taşımaktadır.

Keywords

Yenilenebilir Enerji , Teknolojik İnovasyon , Finansal Küreselleşme , Belirsizlik , Next-11 Ülkeleri

References

• Alam, M.M., Murshed, M., Ozturk, I. and Khudoykulov, K. (2024). Macroeconomic determinants of non-renewable and renewable energy consumption in India: The roles of international trade, innovative technologies, financial globalization, carbon emissions, financial development, and urbanization. Energy, 308, 132939. https://doi.org/10.1016/j.energy.2024.132939
• Al-Thaqeb, S.A. and Algharabali, B.G. (2019). Economic policy uncertainty: A literature review. The Journal of Economic Asymmetries, 20, e00133. https://doi.org/10.1016/j.jeca.2019.e00133
• Baker, S.R., Bloom, N. and Davis, S.J. (2016). Measuring economic policy uncertainty. The Quarterly Journal of Economics, 131(4), 1593-1636. https://doi.org/10.1093/qje/qjw024
• Borozan, D. (2022). Asymmetric effects of policy uncertainty on renewable energy consumption in G7 countries. Renewable Energy, 189, 412-420. https://doi.org/10.1016/j.renene.2022.02.055
• Breusch, T.S. and Pagan, A.R. (1980). The lagrange multiplier test and its applications to model specification in econometrics. The Review of Economic Studies, 47(1), 239-253. https://doi.org/10.2307/2297111
• Chen, Y. and Zhang, X. (2023). Does financial globalization promote renewable energy investment? Empirical insights from China. Environmental Science and Pollution Research, 30(45), 101366-101378. https://doi.org/10.1007/s11356-023-29293-z
• Davis, S. J. (2016). An index of global economic policy uncertainty (NBER Working Paper Series No. W22740). https://doi.org/10.3386/w22740
• Dogan, E. and Seker, F. (2016). Determinants of CO2 emissions in the European Union: The role of renewable and non-renewable energy. Renewable Energy, 94, 429-439. https://doi.org/10.1016/j.renene.2016.03.078
• Doytch, N. and Narayan, S. (2016). Does FDI influence renewable energy consumption? An analysis of sectoral FDI impact on renewable and non-renewable industrial energy consumption. Energy Economics, 54, 291-301. https://doi.org/10.1016/j.eneco.2015.12.010
• Dumitrescu, E.I. and Hurlin, C. (2012). Testing for Granger non-causality in heterogeneous panels. Economic Modelling, 29(4), 1450-1460. https://doi.org/10.1016/j.econmod.2012.02.014
• EDGAR. (2024). GHG emissions of all world countries (Publications Office of the European Union, Luxembourg No. JRC138862). https://doi.org/10.2760/4002897
• Energy Institute. (2025). 2025 statistical review of world energy. Retrieved from https://www.energyinst.org/statistical-review
• EREC. (2006). Renewable energy scenario to 2040. Retrieved from https://europeanclimate.wordpress.com/wp-content/uploads/2008/09/erec_scenario_2040.pdf
• Fan, C. and Usman, A. (2024). How does renewable energy respond to financial globalization and information and communications technology trade? Energies, 17(3), 750. https://doi.org/10.3390/en17030750
• Geng, J.B. and Ji, Q. (2016). Technological innovation and renewable energy development: Evidence based on patent counts. International Journal of Global Environmental Issues, 15(3), 217-234. https://doi.org/10.1504/IJGENVI.2016.076945
• Ghosh, S., Adebayo, T.S., Abbas, S., Doğan, B. and Sarkodie, S.A. (2024). Harnessing the roles of renewable energy, high tech industries, and financial globalization for environmental sustainability: Evidence from newly industrialized economies. Natural Resources Forum, 48(4), 1186-1207. https://doi.org/10.1111/1477-8947.12356
• Gyamfi, B.A., Bein, M.A., Udemba, E.N. and Bekun, F.V. (2022). Renewable energy, economic globalization and foreign direct investment linkage for sustainable development in the E7 economies: Revisiting the pollution haven hypothesis. International Social Science Journal, 72(243), 91-110. https://doi.org/10.1111/issj.12301
• Han, S., Peng, D., Guo, Y., Aslam, M.U. and Xu, R. (2025). Harnessing technological innovation and renewable energy and their impact on environmental pollution in G-20 countries. Scientific Reports, 15(1), 2236. https://doi.org/10.1038/s41598-025-85182-0
• Hassan, Q., Viktor, P., Al-Musawi, T.J., Ali, B.M., Algburi, S., Alzoubi, H.M., ... & Jaszczur, M. (2024). The renewable energy role in the global energy transformations. Renewable Energy Focus, 48, 100545. https://doi.org/10.1016/j.ref.2024.100545
• Holechek, J.L., Geli, H.M., Sawalhah, M.N. and Valdez, R. (2022). A global assessment: Can renewable energy replace fossil fuels by 2050? Sustainability, 14(8), 4792. https://doi.org/10.3390/su14084792
• Ilarslan, K. (2021). Gelişmekte olan ülkelerde yenilenebilir enerji yatırımlarının finansal belirleyicileri üzerine ekonometrik bir analiz. Ekonomi Politika ve Finans Araştırmaları Dergisi, 6(IERFM Özel Sayısı), 79-96. https://doi.org/10.30784/epfad.1020454
• IPCC. (2018). Global warming of 1.5°C. Retrieved from https://www.ipcc.ch/sr15/
• Jalal, M.M. (2025). Energy demand, financial access, and urbanization as determinants of the load capacity factor: Fresh evidence from the United States. International Journal of Business and Economic Studies, 7(4), 272-285. https://doi.org/10.54821/uiecd.1830333
• Jiang, Y. and Khan, H. (2023). The relationship between renewable energy consumption, technological innovations, and carbon dioxide emission: Evidence from two-step system GMM. Environmental Science and Pollution Research, 30(2), 4187-4202. https://doi.org/10.1007/s11356-022-22391-4
• Jin, L., Duan, K. and Tang, X. (2018). What is the relationship between technological innovation and energy consumption? Empirical analysis based on provincial panel data from China. Sustainability, 10(1), 145. https://doi.org/10.3390/su10010145
• Jóźwik, B., Sarıgül, S.S., Topcu, B.A., Çetin, M. and Doğan, M. (2025). Trade openness, economic growth, capital, and financial globalization: Unveiling their impact on renewable energy consumption. Energies, 18(5), 1244. https://doi.org/10.3390/en18051244
• Kang, X., Khan, F.U., Ullah, R., Arif, M., Rehman, S.U. and Ullah, F. (2021). Does foreign direct investment influence renewable energy consumption? Empirical evidence from South Asian countries. Energies, 14(12), 3470. https://doi.org/10.3390/en14123470
• Khan, K. and Su, C.W. (2022). Does policy uncertainty threaten renewable energy? Evidence from G7 countries. Environmental Science and Pollution Research, 29(23), 34813-34829. https://doi.org/10.1007/s11356-021-16713-1
• Khan, K. and Su, C.W. (2023). Does technology innovation complement the renewable energy transition? Environmental Science and Pollution Research, 30(11), 30144-30154. https://doi.org/10.1007/s11356-022-24336-3
• Khan, K., Su, C.W., Rehman, A.U. and Ullah, R. (2022). Is technological innovation a driver of renewable energy? Technology in Society, 70, 102044. https://doi.org/10.1016/j.techsoc.2022.102044
• Koç, H. (2025). The impact of ICT, technological innovation, and digitalisation on achieving sustainable development goals in G20 economies. Journal of Sustainable Digital Futures, 1(2), 132-148. http://dx.doi.org/10.29228/jsdf.88462
• Kurt Cihangir, Ç. (2025). The ımpact of financial innovation on environmental quality, green technological innovation and renewable energy production: Evidence from OECD countries. Ekonomi Politika ve Finans Araştırmaları Dergisi, 10(4), 1579-1602. https://doi.org/10.30784/epfad.1782573
• Lei, W., Liu, L., Hafeez, M. and Sohail, S. (2022). Do economic policy uncertainty and financial development influence the renewable energy consumption levels in China? Environmental Science and Pollution Research, 29(5), 7907-7916. https://doi.org/10.1007/s11356-021-16194-2
• Li, Y.M., Khan, K., Farooque, A.A. and Murshed, M. (2023). Diffusion of technology and renewable energy in the G10 countries: A panel threshold analysis. Energy Strategy Reviews, 49, 101115. https://doi.org/10.1016/j.esr.2023.101115
• Majeed, A., Ahmad, M., Rasheed, M.F., Khan, M.K., Popp, J. and Oláh, J. (2022). The dynamic impact of financial globalization, environmental innovations and energy productivity on renewable consumption: Evidence from advanced panel technique. Frontiers in Environmental Science, 10, 894857. https://doi.org/10.3389/fenvs.2022.894857
• McCoskey, S. and Kao, C. (1998). A residual-based test of the null of cointegration in panel data. Econometric Reviews, 17(1), 57-84. https://doi.org/10.1080/07474939808800403
• Murshed, M., Elheddad, M., Ahmed, R., Bassim, M. and Than, E.T. (2022). Foreign direct investments, renewable electricity output, and ecological footprints: Do financial globalization facilitate renewable energy transition and environmental welfare in Bangladesh? Asia-Pacific Financial Markets, 29(1), 33-78. https://doi.org/10.1007/s10690-021-09335-7
• Persyn, D. and Westerlund, J. (2008). Error-correction-based cointegration tests for panel data. The STATA Journal, 8(2), 232-241. https://doi.org/10.1177/1536867X0800800205
• Pesaran, M.H. (2004). General diagnostic tests for cross section dependence in panels (IZA Discussion Paper Series No. 1240). Retrieved from https://repec.iza.org/dp1240.pdf
• Pesaran, M.H. (2006). Estimation and inference in large heterogeneous panels with a multifactor error structure. Econometrica, 74(4), 967-1012. https://doi.org/10.1111/j.1468-0262.2006.00692.x
• Pesaran, M.H. (2007). A simple panel unit root test in the presence of cross‐section dependence. Journal of Applied Econometrics, 22(2), 265-312. https://doi.org/10.1002/jae.951
• Pesaran, M.H., Ullah, A. and Yamagata, T. (2008). A bias‐adjusted LM test of error cross‐section independence. The Econometrics Journal, 11(1), 105-127. https://doi.org/10.1111/j.1368-423X.2007.00227.x
• Phillips, P.C. and Sul, D. (2003). Dynamic panel estimation and homogeneity testing under cross section dependence. The Econometrics Journal, 6(1), 217-259. https://doi.org/10.1111/1368-423X.00108
• Qamruzzaman, M. (2024). Clarifying the nexus between trade policy uncertainty, economic policy uncertainty, FDI and renewable energy demand. International Journal of Energy Economics and Policy, 14(2), 367-382. https://doi.org/10.32479/ijeep.15470
• Rong, G. and Qamruzzaman, M. (2022). Symmetric and asymmetric nexus between economic policy uncertainty, oil price, and renewable energy consumption in the United States, China, India, Japan, and South Korea: Does technological innovation influence? Frontiers in Energy Research, 10, 973557. https://doi.org/10.3389/fenrg.2022.973557
• Sadorsky, P. (2013). Do urbanization and industrialization affect energy intensity in developing countries? Energy Economics, 37, 52-59. https://doi.org/10.1016/j.eneco.2013.01.009
• Schumpeter, J.A. (1911). The theory of economic development. Cambridge: Harvard University Press.
• Shafiullah, M., Miah, M.D., Alam, M.S. and Atif, M. (2021). Does economic policy uncertainty affect renewable energy consumption? Renewable Energy, 179, 1500-1521. https://doi.org/10.1016/j.renene.2021.07.092
• Shahbaz, M., Topcu, B.A., Sarıgül, S.S. and Doğan, M. (2024). Energy imports as inhibitor of economic growth: The role of impact of renewable and non-renewable energy consumption. The Journal of International Trade & Economic Development, 33(4), 497-522. https://doi.org/10.1080/09638199.2023.2237131
• Shahbaz, M., Topcu, B.A., Sarıgül, S.S. and Vo, X.V. (2021). The effect of financial development on renewable energy demand: The case of developing countries. Renewable Energy, 178, 1370-1380. https://doi.org/10.1016/j.renene.2021.06.121
• Shodrokova, X., Yulianita, A. and Bashir, A. (2024). Economic globalization, renewable energy, and CO. Journal of Applied Economic Research, 23(3), 602-622. https://doi.org/10.15826/vestnik.2024.23.3.024
• Solarin, S.A., Bello, M.O. and Tiwari, A.K. (2022). The impact of technological innovation on renewable energy production: Accounting for the roles of economic and environmental factors using a method of moments quantile regression. Heliyon, 8(7), e09913. https://doi.org/10.1016/j.heliyon.2022.e09913
• Sorrell, S. (2015). Reducing energy demand: A review of issues, challenges and approaches. Renewable and Sustainable Energy Reviews, 47, 74-82. https://doi.org/10.1016/j.rser.2015.03.002
• Stern, D.I. (2011). The role of energy in economic growth. Annals of the New York Academy of Sciences, 1219(1), 26-51. https://doi.org/10.1111/j.1749-6632.2010.05921.x
• Su, C.W., Khan, K., Umar, M. and Chang, T. (2022). Renewable energy in prism of technological innovation and economic uncertainty. Renewable Energy, 189, 467-478. https://doi.org/10.1016/j.renene.2022.02.110
• Sümerli Sarıgül, S. and Çetin, M. (2025). Renewable energy, fossil fuels, and globalization: Policy lessons from Japan for a sustainable future. Journal of Sustainable Digital Futures, 1(1), 36-45. https://doi.org/10.29228/jsdf.82693
• Tithi, S.I. (2025). Pathways to carbon neutrality in the United States: Evaluating private AI investment, financial development, and macroeconomic forces. International Journal of Business and Economic Studies, 7(4), 231-242. https://doi.org/10.54821/uiecd.1831647
• Usman, M. and Balsalobre-Lorente, D. (2022). Environmental concern in the era of industrialization: Can financial development, renewable energy and natural resources alleviate some load? Energy Policy, 162, 112780. https://doi.org/10.1016/j.enpol.2022.112780
• Usman, M., Jahanger, A., Makhdum, M.S.A., Balsalobre-Lorente, D. and Bashir, A. (2022). How do financial development, energy consumption, natural resources, and globalization affect Arctic countries' economic growth and environmental quality? An advanced panel data simulation. Energy, 241, 122515. https://doi.org/10.1016/j.energy.2021.122515
• Wei, W., Hu, H. and Chang, C.P. (2021). Economic policy uncertainty and energy production in China. Environmental Science and Pollution Research, 28(38), 53544-53567. https://doi.org/10.1007/s11356-021-14413-4
• Wen, J., Okolo, C.V., Ugwuoke, I.C. and Kolani, K. (2022). Research on influencing factors of renewable energy, energy efficiency, on technological innovation. Does trade, investment and human capital development matter? Energy Policy, 160, 112718. https://doi.org/10.1016/j.enpol.2021.112718
• Westerlund, J. (2007). Testing for error correction in panel data. Oxford Bulletin of Economics and Statistics, 69(6), 709-748. https://doi.org/10.1111/j.1468-0084.2007.00477.x
• Westerlund, J. and Edgerton, D.L. (2007). A panel bootstrap cointegration test. Economics Letters, 97(3), 185-190. https://doi.org/10.1016/j.econlet.2007.03.003
• World Bank. (2025). Renewable energy consumption (% of total final energy consumption) [Dataset]. Retrieved from https://data.worldbank.org/indicator/EG.FEC.RNEW.ZS
• Xinyu, W., Haoran, L. and Khan, K. (2025). Innovation in technology: A game changer for renewable energy in the European Union? Natural Resources Forum, 49(2), 1462-1477. https://doi.org/10.1111/1477-8947.12450
• Xu, X. and Lieuea, B. (2025). Contribution of modern renewables to final energy consumption, energy intensity, and environmental quality: The role of world energy balances, economic performance, and shadow economies. Energy, 137191. https://doi.org/10.1016/j.energy.2025.137191
• Zeren, F. and Akkuş, H.T. (2020). The relationship between renewable energy consumption and trade openness: New evidence from emerging economies. Renewable Energy, 147, 322-329. https://doi.org/10.1016/j.renene.2019.09.006
• Zhang, Y., Qamruzzaman, M., Karim, S. and Jahan, I. (2021). Nexus between economic policy uncertainty and renewable energy consumption in BRIC nations: The mediating role of foreign direct investment and financial development. Energies, 14(15), 4687. https://doi.org/10.3390/en14154687
• Zheng, S., Yang, J. and Yu, S. (2021). How renewable energy technological innovation promotes renewable power generation: Evidence from China's provincial panel data. Renewable Energy, 177, 1394-1407. https://doi.org/10.1016/j.renene.2021.06.023