The Effect of Economic Complexity on Renewable Energy Consumption: An Analysis of ASEAN+3 Countries

Dara, Kesa, Mutia (2025) The Effect of Economic Complexity on Renewable Energy Consumption: An Analysis of ASEAN+3 Countries. S1 thesis, Universitas Andalas.

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Abstract

This study examines the role of economic complexity in influencing renewable energy consumption in ASEAN+3 countries. Using panel data for 12 ASEAN+3 countries in the period from 1995 to 2021. This study identifies a significant long run relationship among the variables, indicating a stable connection between economic complexity and renewable energy consumption while considering the presence of structural breaks. Short run and long run relationships are estimated using the Pooled Mean Group Autoregressive Distributed Lag (PMG-ARDL) approach. The findings show that economic complexity has a positive and significant effect on renewable energy consumption in the long run. This suggesting that countries with more sophisticated production capabilities are better positioned to expand renewable energy consumption. Growth Domestic Product (GDP) also have a positive and significant long run effect. In contrast, Foreign Direct Investment (FDI) and industry sector show negative and significant long-run effects. This indicating that investment inflows and industrial activities in ASEAN+3 countries still be oriented toward energy intensive or fossil fuel based sectors. In contrast, short run effects of economic complexity are negative significant. Overall, the findings highlight that sophisticated production capabilities and economic growth support renewable energy consumption in the long term, while the structure of investment and industrial development remains a key challenge for sustainable energy transition in ASEAN+3 countries.

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