The Role of Credit, Urbanisation, and Growth in Renewable Energy Consumption: Evidence from Lower-Middle-income Countries

Yıl 2025, Sayı: 42, 129 - 139, 25.06.2025

Büşra Şimşek , Muhammet Sait Bozik

https://doi.org/10.26650/ekoist.2025.42.1598914

Öz

The transition to renewable energy is of critical importance for the economic, environmental, and social development of nations. The accessibility and environmentally friendly nature of renewable energy sources play a vital role in achieving sustainable development goals, particularly in lower-middle-income countries. In this context, examining the potential of economic growth to increase energy demand, the impact of urbanisation on transforming energy consumption patterns, and the critical role of financial support in directing energy projects is essential for predicting the potential effects of the fundamental dynamics shaping renewable energy use. This study intends to analyse the impact of domestic credit, urbanisation, and per capita income on renewable energy consumption in lower-middle income countries. The analysis uses annual data covering the period from 2000 to 2021. The results reveal that credit negatively affects renewable energy consumption. This indicates that financial resources are insufficiently directed towards renewable energy projects or that the existing financial infrastructure tends to favour investments in fossil fuel-based projects. Similarly, the increase in urbanisation also negatively affects renewable energy use. As urbanisation increases, energy consumption patterns tend to rely more on conventional energy sources. Moreover, economic growth, measured by GDP per capita, was found to reduce renewable energy consumption. These findings indicate that economic growth and energy consumption structures in lower-middle-income countries are still largely dependent on fossil fuels, emphasising the need for policy interventions to support the transition to renewable energy.

Anahtar Kelimeler

Renewable Energy , Credit , Urbanisation , Lower Middle Countries

Kaynakça

• Adebayo, T., et al. (2023). Greening the Brazil, Russia, India, China and South Africa (BRICS) economies: Assessing the impact of electricity consumption, natural resources, and renewable energy on the environmental footprint. Natural Resources Forum, 47(3), 484-503. google scholar
• Anwar, I., et al. (2021). The nexus between urbanisation, renewable energy consumption, financial development, and CO₂ emissions: Evidence from selected Asian countries. Environment, Development and Sustainability, 24, 6556–6576. google scholar
• Anton, S. G., & Nucu, A. E. (2020). The effect of financial development on renewable energy consumption. A panel data approach. Renew- able Energy, 147, 330-338. google scholar
• Apergis, N., & Payne, J. E. (2010). Renewable energy consumption and economic growth: Evidence from a panel of OECD countries. Energy Policy, 38(1), 656-660. doi:10.1016/j.energypolicy.2010.09.010. google scholar
• Apergis, N., & Payne, J. E. (2012). Renewable and non-renewable energy consumption-growth nexus: Evidence from a panel error correction model. Energy Economics, 34(3), 733-738. doi:10.1016/j.energyeconomy.2012.09.010. google scholar
• Atems, B., & Hotaling, C. (2018). The effect of renewable and nonrenewable electricity generation on economic growth. Energy Policy, 112, 111-118. doi:10.1016/j.energypol.2018.09.002. google scholar
• Bhattacharya, M., et al. (2016). The effect of renewable energy consumption on economic growth: Evidence from top 38 countries. Applied Energy, 162, 733-741. google scholar
• Bilbao-Ubillos, J. (2013). The limits of human development index: The complementary role of economic and social cohesion, devel- opment strategies and sustainability. Sustainable Development, 21(6), 400-412. google scholar
• Bretschger, L. (2017). Climate policy and economic growth. Resource and Energy Economics, 49, 1-15. google scholar
• Charfeddine, L., & Kahia, M. (2019). Impact of renewable energy consumption and financial development on CO₂ emissions and economic growth in the MENA region: A panel vector autoregressive (PVAR) analysis. Renewable Energy, 139, 198-213. google scholar
• İçen, H., & Yerdelen Tatoglu, F. (2021). The asymmetric effects of changes in price and income on renewable and nonrenewable energy. Renewable Energy, 178, 144–152. https://doi.org/10.1016/j.renene.2021.06.012 google scholar
• Inglesi-Lotz, R. (2016). The impact of renewable energy consumption to economic growth: A panel data application. Energy Economics, 53, 58-63. 4.2 google scholar
• Kahia, M., et al. (2017). Renewable and non-renewable energy use—economic growth nexus: The case of MENA Net Oil Importing Countries. Renewable and Sustainable Energy Reviews, 71, 127-140. google scholar
• Mazzucato, M., & Perez, C. (2014). Innovation as growth policy: The challenge for Europe. SPRU Working Paper Series, 2014-07. google scholar
• Menegaki, A. N. (2011). Growth and renewable energy in Europe: A random effect model with evidence for neutrality hypothesis. Energy Economics, 33(2), 257-263. 4.2 google scholar
• Omri, A., & Nguyen, D. K. (2014). On the determinants of renewable energy consumption: International evidence. Energy, 72, 554-560. google scholar
• Salim, R. A., & Shafiei, S. (2014). Urbanisation and renewable and non-renewable energy consumption in OECD countries: An empirical analysis. Economic Modelling, 38, 581-591. 4.2 google scholar
• Smil, V. (2017). Energy and Civilisation: A History. MIT Press. ISBN: 978-0262035774. google scholar
• Kanger, L. & Sovacool, B. K., & Noorkõiv M. (2020). Six policy intervention points for sustainability transitions: A conceptual framework and a systematic literature review. Research Policy, 49(7), 104072. doi:10.1016/j.rep.2019.07.002. google scholar
• Schmidt, T.S., Steffen, B., Egli, F. et al. (2019). Adverse effects of rising interest rates on sustainable energy transitions. Nature Sustain- ability, 2, 879–885. doi:10.1038/s41893-019-0375-2 google scholar
• Yerdelen Tatoğlu, F., & İçen, H. (2019). The analysis of the environmental Kuznets curve with multi-dimensional panel data models. Ana- tolian Journal of Economics and Business, 3(1), 26–38. google scholar
• Yerdelen Tatoğlu, F. (2013). Panel veri ekonometrisi. Istanbul, Turkey: Beta Yayınları. google scholar