The pursuit of higher economic growth amid rising carbon dioxide emissions has intensified the need to balance development with environmental sustainability. Although several studies show that renewable energy reduces emissions, its impact on specific economic sectors remains unclear. This study investigates the impact of renewable energy on the growth of South Africa’s textile industry, considering the sector’s strategic importance for industrial development and economic growth, alongside its growing adoption of renewable energy technologies to foster sustainable and environmentally responsible production.
This study investigates the effect of renewable energy on the development of South Africa’s textiles and clothing industry using World Bank time-series data covering 1995–2022. The fully modified ordinary least squares and canonical cointegrating regression techniques were used to examine the long-run relationship between renewable energy and sectoral growth. More so, to examine whether the relationships between the explanatory variables and the textiles and clothing sector changes over time, the regression model was estimated for two sub-periods pre- and post- 2008 financial crisis periods.
The results show that, for the full sample, the long-run growth of the textiles and clothing sector is positively influenced by renewable energy. Natural resources, labour, dependency ratio and financial development also support sectoral growth. However, the sub-period analysis reveals some variations. Renewable energy, dependency ratio and capital have positive effects in both periods, with stronger impacts in the post-2008 financial crisis period. Financial development is insignificant before the crisis but becomes negative afterward. Labour shows a negative effect only in the pre-crisis period, while natural resources exert negative effects in both periods, indicating changing dynamics in the sector over time.
The results imply that adopting renewable energy to a attain low-carbon economy is unlikely to harm the textiles and clothing industry. This emphasizes the need for the government of South Africa to attract more private investors to invest in the renewable energy sector. This will increase the share of renewable energy in the total electricity generated.
The study provides evidence of the determinants of the textiles and clothing industry growth at the national level in South Africa. The role of renewable energy in the growth of the textiles and clothing industry is assessed.
