The Nexus between Economic Complexity and Energy Consumption under the Context of Sustainable Environment: Evidence from the LMC Countries

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.