Renewable energy and productivity in Ghana evidence from short and long run dynamics

Abstract The study examines the immediate and long-term effects of renewable energy deployment on productivity growth in Ghana from 1995 to 2021. The analysis uses an autoregressive distributed lag (ARDL) and vector error-correction (VECM) framework to accommodate mixed orders of integration due to sample characteristics. Unit root tests, ARDL bounds testing and Johansen cointegration all provide evidence that stable long-term relationships exist between the variables. The results also showed that renewable energy consumption has a positive and statistically significant influence on short-run productivity development, which confirms H1; and renewable energy will improve access to energy, thus confirming H2. Improved access to energy generates higher productivity, which aligns with the hypothesized mediation pathway in H3. The evidence supporting H5 is only partial, as labor productivity increases with improvements in energy reliability even in the absence of direct policy interventions. Conversely, assumptions relating to capital stock and trade openness (H4 and H6) are unsupported in the medium term due to adjustment costs and structural limitations. Results show that renewable energy can help Ghana’s economy grow by making it more reliable with storage facilities and through increased access. JEL Codes C32, O47, O55, Q42, Q43