Modeling economic growth through renewable energy in rural developing regions - Combining system dynamics with innovation systems theory

Abstract

Rural regions of developing countries are characterized by little economic development and low productivity of capital. This thesis aims to investigate why the interventions launched by their national government and international organizations are seldom successful in supporting local business development. The economic system of rural communities is analyzed with a system dynamics approach, attempting to reveal internal mechanisms to better understand the dynamics of the problem. The analysis also aims to provide a new perspective on the role of renewable energy systems in the developing context, since there is an established link between energy access and economic and social development. An innovation systems theoretical framework is applied to evaluate the innovation capacity of the rural economy, where new business ventures using adapted renewable energy are seen as manifestation of the innovation process. Lack of coordination between government and business sectors, lack of emphasis on the importance of vocational education projects and lack of access to conditional financing are some system weaknesses identified that have effect on local economic development in rural regions. The combination of the tools for analysis mentioned was useful to show how these factors interact in this dynamic problem.