The Economic Effects of Renewable Energy Investments: Evidence from Firm-Level Data

Companies’ Investments in Renewable Energy (CIRE) offer well-known environmental and social benefits, but their economic impact remains unclear, particularly at the microeconomic level. Using the Generalized Method of Moments approach, our empirical study of 93 companies in Saudi Arabia from 2000 to 2023 assessed CIRE’ effects on GDP growth, FDI inflows, employment, and exports. Our findings indicate that increased investments in renewable energy have significantly boosted GDP growth, attracted higher FDI inflows, and generated new employment opportunities, suggesting a favorable investment environment. However, the potential for export growth within this sector appears limited. Robustness checks and instrumental variables confirm these findings. The study provides policy recommendations for maximizing economic benefits from CIRE in Saudi Arabia.