Threshord Effect of the Economic Growth Rate on the Development of Renewable Energy: Evidences from OPEC Countries

This paper studies the non linear relationship between energy prices, natural resources rent opportunities and renewable energy consumption under different economic growth rates for OPEC member countries during the 2005-2016 period.  Using a panel smooth transition regression (PSTR) model, our findings prove a non-linear relationship between renewable energy consumption and the rate of economic growth ; with a GDP growth rate of 4.24% being the threshold at which the nature of the regression relationship. The consumer price of energy, is significantly positively correlated with the contribution of renewables to energy supply in the regime with higher-economic growth, but in the lower GDP growth rate regime the relationship is significantly negative. This result is expected beacause of cheap natural resources, subsidied fuel prices and lack of renewable energy infrastructure development in OPEC member countries. The impact of natural resources rent opportunities was significantly negative in both regimes, but this effect is significantly reduced for high growth rates. Therefore, in countries characterized by high rates of natural resources rents reduces the positive impact of GDP growth rate on use of renewable energies.