Towards sustainable competitiveness: How does financial development affect dynamic energy efficiency in Belt & Road economies?

Energy efficiency offers longer-term benefits by enhancing sustainable competitiveness and reducing emissions. This study first applies a dynamic data envelopment analysis (DEA) model with energy stock as a carry-over indicator to measure the inter-temporal energy efficiency in finding the balance between economic growth and emission reduction in 58 Belt & Road (B&R) economies. The authors then adopt panel regression models to evaluate the non-linear impact of financial development on energy efficiency. Additionally, projection analysis is pursued to provide a viable solution to address the inefficient B&R economies. The results indicate that the overall energy efficiency of 58 B&R countries is relatively low (0.44), while only 7 countries are DEA energy efficient with West Asia & North Africa bloc being the most energy efficient. The average energy efficiency of the B&R economies has dropped since 2013. There is a positive and significant type effect of financial development on energy efficiency, but the effect of financial development on energy efficiency is insignificant for countries at higher financial development levels. Moreover, technological progress positively influences energy efficiency, while land area and urbanization impede energy efficiency. The results of this study equip B&R economies to have an objective view-point of their energy efficiency position and concurrently offer them a way to cut energy costs thereby enhancing their sustainable competitiveness. (C) 2021 Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved.

Automated summary

This study utilizes dynamic data envelopment analysis (DEA) model and panel regression models to examine the energy efficiency of 58 Belt & Road economies. The results show that overall energy efficiency is relatively low, financial development significantly impacts energy efficiency, and technological progress has a positive influence on energy efficiency.