Economic Integration And Energy Intensity: An Empirical Study From The Asia And The Pacific Countries.

Abstract

By using GMM estimator for unbalanced panel data, we examine the impacts of economic integration on energy intensity in two aspects: production energy intensity and consumption energy intensity in 38 Asian-Pacific countries over the period from 2005 to 2019. Our results reveal that economic integration appears to be the main driver for changes in energy demand through different channels (namely scale effect, composite effect and technological effect). Due to geographical characteristics of the APAC region, we obtain that the oil price does not much affect the energy intensity. Likewise, high speed of urbanization do not account for higher energy demand owing to lack of access to energy. We also observe that the flows of inward FDI tend to weaken because of policy changes. Therefore, our findings suggest that policy makers should adopt insightful strategies focusing on clean energy and green finance by using globalization as an economic tool to utilize energy efficiently and sustain economic development.