Do globalization, foreign direct investment, trade openness, and urbanization propel renewable energy transition? Empirical evidence from kernel regularized quantile regression modeling

Abstract

The renewable energy transition remains a critical pathway to addressing climate change and achieving sustainable development. However, the drivers of this transition are understudied in fragile and post-conflict countries like Somalia. Most existing empirical research focuses on advanced or emerging economies, leaving a gap in understanding how globalization, trade openness, foreign direct investment (FDI), urbanization, and economic growth influence renewable energy adoption in under-researched contexts. This study fills that gap by employing quarterly data from 1990 to 2023 and applying the Kernel Regularized Quantile Regression (KRQR) method to assess the heterogeneous impacts of these macroeconomic factors on renewable energy consumption in Somalia. The results reveal that globalization and urbanization exert consistently positive effects across most quantiles, reinforcing their critical roles in advancing renewable energy. Conversely, trade openness and FDI show mixed or nonlinear effects, depending on the level of renewable energy usage. Notably, economic growth demonstrates a negative relationship across all quantiles, indicating Somalia's ongoing dependence on fossil fuels. These findings emphasize the need for context-specific, distribution-sensitive policy frameworks. Policymakers should reform trade and investment strategies to facilitate clean energy technology inflows and promote urban infrastructure planning. Enhancing institutional capacity and aligning growth policies with environmental goals is essential for accelerating Somalia's energy transition.