Energy Transition, Economic Growth and Foreign Direct Investment: Unveiling the Renewable–Non-Renewable Energy Nexus in Saudi Arabia Using an ARDL Approach

Whether renewable energy is reshaping the growth model of hydrocarbon exporters is central to sustainable development and Sustainable Development Goal 7. We examine interactions among renewable-energy consumption (REC), non-renewable energy consumption, economic growth, foreign direct investment (FDI) and trade openness in Saudi Arabia over 1980–2021. We apply bootstrap ARDL bounds tests and Toda–Yamamoto tests corrected for serial correlation and multiple testing. We find no statistically detectable long-run relationship in which REC adjusts to growth, fossil-energy use, FDI or trade; this is robust to alternative specifications and to the treatment of missing pre-1990 REC data, but inconclusive with observed data only (1990–2021). A conditional long-run relationship normalised on GDP is driven mainly by trade openness, and the positive GDP–REC association disappears once the pre-1990 imputation is controlled for. Trade openness exhibits a robust Granger-causal effect on FDI, whereas no variable, including FDI, robustly predicts REC, and causality from FDI or REC to GDP is not robust. Renewables, below 0.1% of final energy use, are not yet detectably linked to Saudi macroeconomic dynamics: the data show no evidence that low-carbon energy follows from growth or FDI and cannot indicate whether the Vision 2030 targets will be met, so sustainability progress must be monitored directly.