DOES ENERGY PRODUCTIVITY AFFECT A COUNTRY'S ECONOMIC EFFICIENCY? EVIDENCE FROM SELECTED ASEAN COUNTRIES

Abstract

With the continuous increase in the demand for energy, rapid and sustained growth in energy consumption and low growth in energy production, one of the top priorities for sustainable development and environmental protection is to reduce energy usage and improve economic efficiency. Although it is clear that energy productivity has a positive impact on a country’s economic efficiency, how sensitive is the response of economic efficiency is to the increase in energy productivity needs to be analyzed. Hence, our study intends to analyze the effect of energy productivity on economic efficiency in the ASEAN countries. The present study utilizes the advanced methodology of CS-ARDL, which is known for producing robust and reliable results, on the ASEAN region which comprises countries that are still dependent on non-renewable energy, thereby drastically polluting the environment. The findings from the CS-ARDL method revealed that energy productivity has a positive and significant relationship with economic efficiency. Based on the findings, several recommendations are proposed, such as adopting renewable energy resources that support environmentally friendly energy production to ensure sustainable energy and encouraging smart energy systems to be installed at government buildings or manufacturing buildings which deploy new technologies that increase energy efficiency.