High‐tech industries, financial expansion, and low‐carbon energy deployment along the Belt and Road Initiative

Abstract

AbstractWhile the Belt and Road Initiative (BRI) is thought to radically transform trade, financial and industrial patterns in Eurasia, questions remain on how to develop a secure supply of renewable energy without jeopardizing the booming energy demand of those regions. Due to the intrinsic nature of BRI projects, foreign direct investments (FDI) and high‐tech industries are yet known to be two key channels through which resources and renewable energy consumption are deployed along the Belt and Road. This article assesses the empirical interactions among those variables and renewable energy deployment for an illustrative sample of 76 Belt and Road economies. A set of potentially relevant economic and institutional factors (economic complexity, the stock of human capital (HC), and three cultural preferences indexes: power distance, uncertainty avoidance, and masculinity vs. diversity) are also incorporated within the multivariate setting. Based on series spanning the period 1996–2019, a complete econometric testing framework is developed, and comprises the simultaneous generalized method of moments and the method of moments quantile regression. Associated results confirm our initial intuition that medium and high‐tech industries trigger the diffusion of low‐carbon energies across sectors whereas FDI fail to do so. Finally, renewable energy deployment responds negatively to changes in HC. Along with a methodological note, some policy suggestions are supplied to incorporate those insights within future energy planning.