Does the potency of economic globalization and political instability reshape renewable energy usage in the face of environmental degradation?

Abstract

Since renewable energy is essentially non-carbohydrate in nature, it can generate little or no pollutants and can therefore help in achieving both sustainable development and environmental quality. In this regard, the question that continues to persist is whether economic growth, economic globalization, and political risk can potentially affect renewable energy in the presence of environmental deterioration. In this context, the current research provides evidence to support this theoretical context by investigating the impact of economic globalization, economic growth environmental degradation, and political risk, on the usage of renewable energy in Vietnam using a dataset spanning the period between 1984 and 2019. For empirical analysis, the dynamic autoregressive distributed lag approach is utilized. Based on our analysis, economic growth positively impacts renewable energy in the long and short term. Economic globalization also positively affects renewable energy in the long term, but a neutral impact is uncovered in the short term. Political risk and environmental degradation are adversely related to renewable energy in the short and long run. The findings from the frequency domain approach reveal a causal interaction from political risk to renewable energy, and from renewable energy to economic globalization, whereas a feedback causal interaction is discovered between renewable energy and environment degradation, as well as between economic growth and renewable energy. From a policy standpoint, we propose that the Vietnamese policymakers need to consider economic globalization as a renewable energy promotion tool via capital inflow, foreign direct investment, and technological transfer.

Keywords: Economic globalization; Economic growth; Environmental degradation; Political instability; Renewable energy; Sustainable energy.