Is Globalization Driving the Use of Renewable Energy? A Global Macro Perspective

Abstract

The contemporary world has become increasingly interdependent in terms of economic, social and political development. These various forms of interdependence, usually termed globalization, help disseminate ideas, information, products, and services around the world. Increase in globalization has also increased path-dependence, affecting economic, social, and institutional development and completing some industries, products and technologies to grow in line with the global demand and changing standards. While the role of globalization in economic growth, technology transfer and institutional development is established in literature, the role of globalization in reversing environmental deterioration is not explored yet. The current study looks at how globalization has affected renewable energy use in high, upper middle and lower middle income countries. The empirical results based on a fixed effects model show that countries differ in terms of taking advantage of different types of globalization, i.e., economic, social and political, while transitioning towards renewable energy (RE) projects. Economic globalization has a positive influence on RE usage in the case of high and lower middle income countries, Social globalization in case of high and upper middle income countries. Contrary to the positive impacts of economic and social globalization, political globalization has a negative impact on RE usage in the case of high income countries. In addition to globalization, the effect of government effectiveness, GDP per capita and CO2 vary across the groups of countries.