LASA/EANLAS: Rethinking Trans-Pacific Ties: Asia and Latin America

A Comparative Analysis of The Nexus among REN, FDI, and GDP in Taiwan and Chile

• In Event: Comparative Assessment between Asia and LAC economies

Abstract

In the 2030 Agenda for 17 Sustainable Development Goals (SDGs) proposed in 2015, Goal 7, calling for “affordable, reliable, sustainable and modern energy for all”, has been concerned as the core of the COVID-19 response and of efforts to confront climate change by the United Nations in 2021. Sustainable energy does not only contribute to a better living environment for all mankind but also provides a considerably energy-stable market as an attractive destination for foreign direct investment (FDI). Besides, FDI is associated with better practices and innovative knowledge to not just improve the development of renewable energy but overall GDP growth as well. While the relationship among energy consumption, FDI, and GDP has long been well explored in the past, the discussions on the relationship among renewable energy consumption (REN), FDI, and GDP remain comparatively limited. The study applies the vector autoregressive model (VAR) and impulse response functions (IRFs) approaches to examine the nexus among REN, FDI, and GDP in Taiwan and Chile, members of APEC and attractive destinations for foreign investment, respectively. The empirical findings show that foreign investors are more sensitive to the economic performance in Chile. Once economic uncertainty appears, it requires a longer time to gain investors’ confidence. The consumption of renewable energy in both Taiwan and Chile is closely associated with the national GDP; however, in Taiwan, the response to GDP is negative and mild while the response is positive and rather stronger as well as lengthier in Chile.

Authors

• Brígida Chiao-Wen Cheng, National Kaohsiung University of Science and Technology

• Song-Zan Chiou-Wei, National Kaohsiung University of Science and Technology