RENEWABLE ENERGY TECHNOLOGY INVESTMENT AND ECONOMIC STABILITY: EVIDENCE FROM DEVELOPING COUNTRIES

Abstract

This study examines the impact of renewable energy technology investment on economic stability in developing countries. The analysis employs annual data from 2019 to 2023 covering four developing economies: Indonesia, India, Vietnam, and Bangladesh. Economic stability is proxied by GDP growth, inflation, and unemployment, while renewable energy investment is measured by the value of clean energy investment. The AutoRegressive Distributed Lag (ARDL) approach is applied to capture both short-run and long-run relationships among variables. The empirical results indicate that renewable energy investment has a positive and statistically significant effect on GDP growth in both the short and long run. Furthermore, renewable energy investment contributes to inflation control, although its effect on unemployment remains relatively weak and statistically insignificant. These findings suggest that renewable energy investment not only facilitates energy transition but also plays a crucial role in enhancing macroeconomic stability in developing countries. Accordingly, policies that promote sustained investment in renewable energy are essential to support long-term economic growth and strengthen national economic resilience.