Exploring the role of fossil fuels, hydroelectricity consumption, and financial sector in ensuring sustainable economic
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RESEARCH ARTICLE
Exploring the role of fossil fuels, hydroelectricity consumption, and financial sector in ensuring sustainable economic development in the emerging economy Faisal Faisal 1 & Muhammad Numan Khan 1 & Ruqiya Pervaiz 2 & Peshraw Majid Muhamad 3 & Mohammad Othman Jamil Rashdan 4 Received: 10 December 2019 / Accepted: 23 August 2020 # Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract This study is conducted to address the research question of whether hydroelectricity and fossil fuels contribute to sustainable economic development in an emerging economy in this era of globalization? Further, this study applies the novel approach of Harvey unit root test which is a linearity test to predict the possible existence of non-linearity. The results confirmed that the majority of the series in this study are linear. Furthermore, the two break test is applied to investigate the integration sequence of the series. The bounds test approach confirms the existence of a long-run association among the variables. Additionally, the longrun relationship is analysed within the framework of the ARDL approach. Financial development, fossil fuel, and capital positively contribute to economic development, while the effect of hydroelectricity is insignificant. Moreover, globalization effects GDP negatively. The symmetric causality suggests a uni-directional causal movement from hydroelectricity consumption and globalization towards GDP. The outcome of the study emphasizes the importance of renewable sources such as hydropower energy for ensuring sustainable development in the presence of globalization. Keywords Fossil fuels . Hydroelectricity . Globalization . Harvey unit root test . Financial globalization
Introduction The demand for energy has been on the rise around the globe. This demand for energy, on the one hand, upsurges the use (domestic and commercial) of energy to fill the growing need. At the same time, the significant emissions into the atmosphere are causing damage to the environment. This situation has motivated researchers to investigate alternative sources of energy that offer less emissions and more productivity. This Responsible editor: Philippe Garrigues * Faisal Faisal [email protected] 1
Institute of Business Studies and Leadership, Faculty of Business and Economics, Abdul Wali Khan University, Mardan, Pakistan
2
Department of Zoology, Faculty of Life and Chemical Sciences, Abdul Wali Khan University, Mardan, Pakistan
3
Bekhal Bank, Erbil, Iraq
4
Department of Banking and Finance, Near East University, Mersin 10, 99138 Nicosia, North Cyprus, Turkey
further encourages the use of hydroelectric power and other renewable sources of energy that have a significant effect in decreasing the dangerous emissions, thus ensuring sustainable development. The means of hydroelectric power were first developed in 1935, with consistent improvement in hydro technology observed until 1974.1 Approximately 20% of the world’s electricity produced by hydropower is characterized as clean energy, whil
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