Abstract

This study investigates the impact of various economic factors on renewable energy (RE) consumption in Tunisia, utilizing the ARDL model to estimate both short- and long-term dynamics. The analysis includes variables such as economic growth (EG), foreign direct investment (FDI), institutional quality (QI), institutional environment (IE), financial flows (FF), and good governance (GG). The period under study ranges from 1994 to 2024, with data comprising 31 observations. The long-term results indicate that economic growth (EG) has a negative effect on renewable energy consumption (RE), with a statistically significant relationship at the 0.11% level. The study also shows that FDI, institutional quality, and governance have varying impacts on renewable energy consumption. In the short term, the most influential variables on renewable energy consumption include FDI, institutional quality, and financial flows, with both significant positive and negative effects. The study suggests that policy interventions should focus on enhancing investments in institutional quality and governance, improving the environment for foreign direct investment, and strengthening financial flows to ensure sustainable growth in renewable energy consumption. The results provide valuable insights for policymakers aiming to align economic development with renewable energy growth in the context of a rapidly changing global economy.