The prevailing economic growth model prioritizing economic is no longer valid due to a great need for a sustainable and balanced growth model encompassing both economic expansion and environmental sustainability and the natural resource conservation, which is important to explaining carbon neutrality and the sustainable development goals. The impact of renewable energy transition on green economic growth is examined in this study by a rigorous econometric analysis of the panel data of the fourteen Latin American countries from 2003 to 2020 with special focuses on: identifying the primary mechanisms by which renewable energy transition affects green economic growth, assessing the heterogeneous effects of renewable energy transition considering geographical location and natural resources dependency, and evaluating the spatial spillover effects of renewable energy transition on green economic growth. The results of this study confirm that the transition to renewable energy significantly boosts green economic growth; but its effect differs significantly by country’s geographical location, fossil fuel dependence, and mineral resource dependence. This study also identifies five mediating variables between renewable energy transition and green growth: capital investment, dependency on hydropower in electricity generation, residential electricity consumption per capita, human capital, and the creation of formal jobs. Lastly, a negative spatial spillover effect of renewable energy transition is found in the Latin American region.
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