Renewable energy, trade, and economic growth in the Asia-Pacific region

ABSTRACT

This paper employs panel multivariate technology to probe the impact of renewable energy and trade (imports and exports) on the output and to study the Granger causality between the mentioned variables with a sample of 15 Asia-Pacific countries for the period of 1994–2014. Short-run causality tests show bidirectional causal relationship between the output and exports and no Granger causal relationship from imports to renewable energy or the output. Moreover, long-run causality tests show bidirectional causality between the output and renewable energy, and unidirectional causality from international trade (imports and exports) to the output and renewable energy. The long-run elasticities indicate that the renewable energy consumption and trade play positive roles in economic growth. This study’s energy policy recommendation is that policy authorities should encourage the development of trade (imports and exports), which not only drives economic growth and prosperity but also accelerates the pace of renewable energy consumption.

Keywords:

• Asia-Pacific region
• output
• panel cointegration
• renewable energy consumption
• trade
• vector error correction model

Notes

¹ REN21 Global Status Report 2015. http://www.ren21.net/wp-content/uploads/2015/07/REN12-GSR2015_Onlinebook_low1.pdf;

² International Trade Statistics, 2015. World Trade Organization. https://www.wto.org/english/res_e/statis_e/its2015_e/its2015_e.pdf;

³ BP statistical review of world energy, 2016. http://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html

⁴ World Bank. 2016. World Development Indicators, http://data.worldbank.org/data-catalog/world-development-indicators.

⁵ Japan’s Annual Report on Energy, 2016. Agency for Natural Resources and Energy. http://www.meti.go.jp/english/press/2016/pdf/0517_01.pdf