The Impact of Renewable and Non‐Renewable Energy on Economic Growth: Evidence From Sub‐Saharan African Countries Using Multivariate Panel Vector Autoregressive Modeling

Abstract

ABSTRACT The energy sector is a critical indicator of economic growth, and this study examines the relationship between energy consumption and economic growth in 39 Sub‐Saharan African (SSA) countries from 1990 to 2018. Using a multivariate panel vector autoregressive (PVAR) model, the study analyzes the impact of renewable and non‐renewable energy, labor force, and investment on economic growth. Results show that non‐renewable energy and TLF growth at lag 1 positively influence economic growth, while renewable energy at lag 1 has a significantly negative effect. The PVAR Granger causality test reveals bidirectional causality between economic growth, labor force, and both energy types. However, gross fixed capital formation (used as a proxy for investment) does not cause economic growth. The study highlights the need to increase investment in renewable energy while reducing reliance on non‐renewable sources. Policymakers can use these insights to develop inclusive energy strategies that balance economic development with sustainable energy use.