Financial, Economic, and Governance Drivers of Energy Intensity in Belt and Road Initiative Nations Vol. 13, Issue 01

Abstract

This paper explores the relationship between the financial, economic, and governance factors of energy intensity in Belt and Road Initiative (BRI) countries. Focusing on how to achieve energy efficiency and development, it relies on previous research and econometric data to explore the financial and economic factors, environmental trends, and governance indicators that predetermine energy intensity in BRI countries. The study focuses on three crucial dependent variables using an integrated fixed effects regression analysis: 1) energy use per gross domestic product (EU/GDP), 2) industrial value added per industrial manufacturing output (IVA/IMO), and 3) energy use per purchasing power parity (EU/PPP). Our findings suggest that the financial factor index (FFI) and economic factor index (EFI) explain energy intensity measures significantly through EU/GDP and EU/PPP, respectively. Partially moderating energy outcomes such as institutional quality (IQ) and governance effectiveness (GE) correspond to the quality of governance. Other interaction terms reveal a pattern between IQ and FFI, particularly the moderating effect of governance on economic factors in EU/GDP (FFI*IQ). This paper highlights the consequences of the sustainable development of energy in BRI countries, implying that energy intensity must be improved efficiently. This is with reference to the interrelationships among the financial and economic systems and governance. Adding another layer to the concept of efficiency, this paper provides a better understanding of sustainable development in the BRI region.