Green Energy and Economic Development: A Macro Analysis

This study explores the relationship between renewable energy consumption and economic development in Pakistan from 2000 to 2022. Guided by the Neoclassical Growth Theory, Environmental Kuznets Curve (EKC), Porter Hypothesis, and Sustainable Development Theory, it employs the ARDL approach to capture both short- and long-term effects. GDP per capita serves as a proxy for economic development, while independent variables include carbon emissions, renewable energy use, gross fixed capital formation, labor force participation, and population growth. The findings reveal that renewable energy consumption, CO2 emissions, capital formation, labor force participation, and population growth all have a positive impact on GDP per capita, with capital formation and labor force participation being the most influential variables in the long-term. The findings support the EKC and the Porter Hypothesis and reinforce the role of labor as proposed by endogenous growth theories, offering insights for sustainable policy formulation in Pakistan.