The Role of Human Capital and Energy Transition in Driving Economic Growth in Sub-Saharan Africa

Abstract

This research investigates the role of fossil fuel energy, renewable energy, and education in terms of years of schooling and mean years of schooling on the economic growth of 19 selected Sub-Saharan African countries. The primary objective is to assess whether renewable energy and educational attainment serve as viable long-term drivers of economic development in a region still heavily reliant on fossil fuels. We employed the newly developed and robust econometric estimators, including Residual Augmented Least Squares (RALS) co-integration, to estimate long-term links among the facets of study. Moreover, Pooled Mean Group-Autoregressive Distributed Lag model (PMG-ARDL) and Quantile Autoregressive Distributed Lag (QARDL) econometric estimator was employed to estimate the long and short coefficients of the antecedents of study. The estimations obtained from the PMG-ARDL and QARDL estimators provide evidence that the coefficients of fossil fuel energy and renewable energy on economic growth are positive. But surprisingly, the magnitude of renewable energy is greater than fossil fuel energy in Sub-Saharan countries that still depend on fossil fuels. Moreover, human capital and capital stock boost economic growth in the countries studied. The outcomes reveal that not only quality but also quantity of education play a vital role in boosting economic development. To deepen the understanding of the observed effects, the study also explores the transmission channels through which renewable energy and education foster economic growth. Renewable energy contributes by lowering the marginal cost of electricity, encouraging green industrial transformation, and serving as a catalyst for technological innovation. Concurrently, improvements in education-measured by both expected and mean years of schooling-elevate labor productivity and facilitate the absorption and diffusion of new technologies across sectors, thereby stimulating sustained economic performance. The empirical results provide valuable insights for government officials and policymakers in specific Sub-Saharan African countries.