Abstract
The wide application of various energy resources in economic development is allegedly responsible for deepening environmental deterioration in terms of increasing pollution emissions and other negative consequences including climate change. This current work investigates the interdependent correlation between energy consumption (both fossil fuel energy consumption and renewable energy consumption) and economic complexity among Lancang-Mekong Cooperation (hereafter LMC) countries, from 1991 to 2017. As for empirical analysis, a panel vector autoregression (PVAR) model was employed. Outcomes of this research confirm the existence of a unidirectional relationship between energy consumption and economic complexity index. It is verified that renewable energy usage is a possible alternative to traditional energy and is able to increase economic complexity. This current research proposed to contribute as a pioneering exploration on LMC countries by adding original observations into existing studies. Finally, we will discuss policy implications of this work.
Highlights
According to a report released by the United Nation on October, 2018, that the world could be on the brink of a climate change disaster if immediate actions are not made.Based on a recent prediction released by U.S Energy Information Administration (EIA), with the prevailing energy consumption rate, the world is expecting a 50% increase in energy usage by 2050, led by growth in Asia
Literature review of this work is grouped into two research strands which were examining the aforementioned topics of environmental economics: first, the indicators we are adopting, including energy consumption, economic complexity; second, the methodologies used in relevant research
EC means energy consumption, ECI refers to Economic Complexity Index, EXP is export diversification, TRADE means trade margins which will be represented by extensive trade margins and intensive trade margins, respectively
Summary
According to a report released by the United Nation on October, 2018, that the world could be on the brink of a climate change disaster if immediate actions are not made. For developing countries to progress in a track of sustainable path, it is imperative for them to adopt cleaner alternatives for energy consumption in order to reduce climate change effects as well as pollution emission [7]. Countries of of this region have witnessed enormous economic growth, while side-effects of this this region have witnessed enormous economic growth, while thethe side-effects of this inincrease such inequalityand andenvironmental environmentalpollution pollutionhave havealso evoked evoked attention. Existing studies in the empirical literature have been inconclusive in exploring the causality between economic complexity and energy consumption (neither renewable energy consumption nor non-renewable energy consumption) This current research proposed to fill a gap in existing literature with a concentration on the LMC member countries by using Panel Vector-Autoregressive models.
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