Does Trade-Oriented Policy Moderate Energy Transition for Economic Prosperity in ASEAN-7 Countries: Insight from a US-Centric Focus

This article looks at how trade, energy transition indicators, and economic prosperity are connected in the ASEAN-7 countries (Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam) from 1995 to 2021. Using dynamic panel data and panel threshold regression analysis, the research shows that trade openness has a significant effect on energy transition and economic prosperity. The key findings include: first, there is a strong conditional relationship between trade openness and energy transition indicators that affect economic prosperity. Second, the study finds different patterns for the indicators: an inverted U-shaped relationship for renewable energy share, peaking at about 34.7% before declining, and a U-shaped relationship for total energy use, which first drops to a low of 50.9 kgoe per capita before rising again. This indicates that economic prosperity first benefits from an increase in renewable capacity but later shifts toward total energy consumption. Third, the research identifies a trade threshold of 5.40, connected to a trade share of GDP of 221.41%, necessary to maximize the benefits of energy transitions in the region. The article highlights the complexity of the relationship between trade dynamics and energy policies. It suggests that well-designed trade strategies can improve the benefits of energy transitions. However, it also points out limitations, such as its focus on ASEAN-7 due to data constraints, possible biases from endogeneity in the model, and the complex effects of CO2 emissions on economic prosperity. Future research could help policymakers find a balance between economic prosperity and sustainable energy use. Future research should explore more fundamental trade liberalization issues involving the US and other global regions. Including a broader array of topics, especially relevant research on the sustainable development of countries in the Asia-Pacific region, could enhance future studies.