Journal of Education, Law and Social Sciences

Renewable and Non-Renewable Energy Consumption, Financial Development, and Economic Growth Nexus: Evidence from Pakistan

Zohaib Kamran Chaudhary

M. Phil Scholar, Bahauddin Zakariya University, Multan, Pakistan

Mubashir Muneer

M. Phil (Economics), National College for Business Administration & Economics, Lahore.

Keywords: Energy Security; Renewable Energy; Fossil Fuels; Financial Development; Economic Growth; Pakistan.

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Abstract

This Pakistan is confronted by chronic electricity shortfalls, an escalating dependence on imported fossil fuels, and accelerating consumption demands—factors that together undermine sustained macroeconomic stability. Securing a reliable and affordable energy supply while preserving a high growth trajectory necessitates a deliberate and deliberate integration of both renewable and fossil fuel resources. This investigation quantifies the differential influence of renewable and carbon-based energy consumption, together with measures of financial development, on macroeconomic performance. Annual observations from the period extending 2000 to 2023 have been assembled from the World Development Indicators, the International Energy Agency, and BP Energy Outlook. Symmetric and asymmetric speeds of adjustment have been estimated by employing both autoregressive distributed lag (ARDL) and nonlinear autoregressive distributed lag (NARDL) models; the consistency of the findings is then checked through a constrained vector error-correction framework that inspects Granger causality relations. Empirical results indicate that fossil energy delivers a transitory growth stimulus on short time horizons yet imposes a progressively severed and irreversible drag in equilibrating long durations, attributable to escalating import bills and negative external juice. By contrast, renewable energy manifests a statistically and economically notable positive influence that stabilizes long horizons, conforming to the growth trajectory of a sustainable development setup. Complementarily, well-designed financial development is shown to mediate and accelerate renewable mobilizations, further contributing to general energy security. The collective implication of the results calls for a systematic diversification of supply portfolios, a recalibration of financial sector architectures, and policy architectures that privilege and promote the non-green energy sector to secure macroeconomic sustainability for the Pakistan economy.