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FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS -*** MIDTERM ASSIGNMENT Module: International Economics THE IMPACT OF RENEWABLE ENERGY ON TRADE OPENNESS OF ASEAN COUNTRIES FROM 2007 TO 2021 Class: Cycle: 60 Group: Instructor: Hanoi, March 2023 TABLE OF CONTENT ABSTRACT INTRODUCTION CHAPTER OVERVIEW OF THE TOPIC 1.1 The concept of trade openness 1.2 Literature review 1.2.1 Renewable Energy Consumption .4 1.2.2 Energy Intensity Level 1.2.3 Gross Fixed Capital Formation 1.2.4 Total Labor Force 1.2.5 Urbanization Rate .7 1.3 Research hypotheses CHAPTER METHODOLOGY, MODEL SPECIFICATION AND DATA ANALYSIS 2.1 Research methodology 2.1.1 Data collecting method .8 2.1.2 Data analyzing method .8 2.1.3 Model specification .8 2.1.4 Variables description 10 2.2 Data inferences .10 2.2.1 Statistical description of variables 10 2.2.2 Correlation description of variables 11 CHAPTER ESTIMATED REGRESSION MODEL AND STATISTICAL INFERENCES .14 3.1 Estimated model results .14 3.1.1 Regression Model Estimation 14 3.1.2 Sample regression model 14 3.1.3 The coefficient of determination .14 3.1.4 Meaning of estimated coefficients 15 3.2 Hypothesis testing 15 3.2.1 Statistical significance of individual coefficients .15 3.2.2 Overall significance of the regression model 17 3.2.3 Theoretical and expected fitting test 17 3.3 Mechanism relationship .17 3.3.1 Renewable Energy Consumption .17 3.3.2 Energy Intensity Level 18 3.3.3 Gross Fixed Capital Formation 18 3.3.4 Total Labor Force 18 3.3.5 Urbanization Rate .19 3.4 Recommendations 19 CONCLUSION 21 REFERENCES 22 APPENDICES 24 LIST OF TABLES AND LIST OF FIGUR Table 2.1 Regression coefficient expected sign .10 Table 3.1 Meaning of estimated coefficients 15 Y Figure 1.1 Trade openness of ASEAN countries from 2007 to 2021 (Source: World Development Indicator) .3 Figure 2.1 Statistical description of variables (Source: STATA) 10 Figure 2.2 Correlation between variables (Source: STATA) 11 Figure 3.1 Estimated model result (Source: STATA) .14 ABSTRACT The study examines and analyzes the impact that renewable energy could have on trade openness by using a linear regression model Statistical data was collected from a panel data set of ASEAN economies during 2007-2021, which helped validate the index of renewable energy and its components At first, we provided an overview of trade openness of ASEAN countries in the selected time period, along with the theoretical basis of renewable energy and its indicators thanks to previous studies available Secondly, we collected and sorted real time data and processed the regression model by using STATA software After that, the estimated model was yielded and the regression results were revealed The overall results identify that determinants such as urbanization rate, total labor force and gross fixed capital formation per capita effectively contribute to national economic trading activities while the effect of renewable energy consumption was vague INTRODUCTION The relationship between trade openness and renewable energy has long been a source of concern for researchers and policymakers Trade openness has been highlighted in recent environmental quality literature, but different studies have reached contradictory conclusions Trade openness is not going in a certain direction, which reason is now being considered that renewable energy is, to some extent, taking hold of, particularly in ASEAN countries as these countries try to increase economic growth through these factors The increasing volume of trade activities among different countries, as well as changes in environmental quality, have prompted this debate about the impact of trade on the environment Trade openness is regarded as a key determinant of economic growth; yet, it is easily affected by environmental quality in some countries Therefore, we want to study more about the level of impact between the two objects, with the hope that we can help people to have a better understanding about renewable energy, its development, causes and impacts on the global economy, and on trade openness in particular Thus, each of us will have a more comprehensive view of the crisis and from there, we will be able to find lessons as well as solutions to help the policymakers avoid the risks that life has faced crisis, and at the same time find appropriate orientations so that the countries studied can take advantage of its opportunities for economic growth Endogenous growth theory, as expressed by Levine (2005) and others, emphasizes the importance of financial sector depth in encouraging long-run economic growth because it promotes effective intertemporal resource allocation, capital accumulation, and technological innovation Hence, while financial depth may lead to economic growth, economic growth may lead to even more financial depth Similarly, financial depth and trade openness can be connected International trade can induce more renewable energy use, for many reasons In the previous 13 years, for example, emerging countries' contribution to trade openness has increased about one and a half times, despite struggles the economy has gone through This increase in international trade raises concerns about the influence on greenhouse gas emissions The impact of trade on pollution can be described by three major effects: scale, composition, and technology International trade can be utilized to spread climate-changefighting technologies, particularly from developed to developing countries Hence, it is admitted that international trade and renewable energy consumption are linked In another Document continues below Discover more from:tế lượng kinh kte309 Trường Đại học… 816 documents Go to course Tổng hợp đề CK KTL 17 đáp án - đề thi tổng… kinh tế lượng 100% (8) ĐỀ Kinh Te Luong TEST1 kinh tế lượng 100% (6) Ý NGHĨA BẢNG HỒI 18 QUY MƠ HÌNH BẰN… kinh tế lượng 100% (5) Tiểu luận Kinh tế 30 25 lượng - nhóm 11-đã… kinh tế lượng 100% (5) Tiểu-luận -Đạođức-kinh-doanh-… kinh tế lượng 100% (4) ĐỀ ÔN THI KINH TẾ LƯỢNG CUỐI KÌ paper, Sadorsky (2012) confirms the long-run causality between trade and energy consumption 42 using a sample of South American countries He concludes that environmental policies made kinh tế 100% (4) to reduce energy consumption will reduce trade lượng Our research objective is to assess the impact of renewable energy on trade openness to show the relationship and influence level of each of these factors Our research scope includes parts: content scope, time scope and spatial scope The content scope is researching the effect of renewable energy on trading in the ASEAN countries The time scope of the data in this research is from 2007 to 2021 The spatial scope is the economic territory of the 11 ASEAN countries: Brunei, Burma (Myanmar), Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam Previous research has looked at the impact and relationship between the trade openness and renewable energy through various popular macroeconomic factors This study covers some novel variables that have been theoretically demonstrated to affect the trade openness but have not appeared yet in previous studies This report will summarize our process to create the final product and express our point of views in three main sections: Literature review, Model specification and data, and Research results While Literature review starts with the initial problems, the other two will help narrow down, focus on the root of the problem by our approaching methods (observe, analyze data), then finally reach the conclusion and give some recommendations for the concern CHAPTER OVERVIEW OF THE TOPIC 1.1 The concept of trade openness Trade openness refers to the outward or inward orientation of a given country's economy Outward orientation refers to economies that take significant advantage of the opportunities to trade with other countries Inward orientation refers to economies that overlook taking or are unable to take advantage of the opportunities to trade with other countries Some of the trade policy decisions made by countries that empower outward or inward orientation are trade barriers, import-export, infrastructure, technologies, scale economies and market competitiveness Trade openness can be calculated by following formula: The below chart illustrates trade openness indices of ASEAN countries: Figure 1.1 Trade openness of ASEAN countries from 2007 to 2021 (Source: World Development Indicator) It can be seen that Singapore had the highest trade openness indices through the years The maximum value reached nearly 450% in 2018 and the trough was still higher compared to other countries (300%) The following was Malaysia from 2007 to 2014, then it was replaced by Vietnam in following years Most countries’ indices remained in the range from 150% to 50% The lowest one belonged to Myanmar and Indonesia, below 50% Overall, the trends of each country’s trade openness have no similarity 1.2 Literature review 1.2.1 Renewable Energy Consumption Renewable energy is energy derived from natural sources that are replenished at a higher rate than they are consumed This type of energy can be used to generate electricity, water heating and cooling, and transportation Renewable energy sources abound and are all around us Some common sources of renewable energy are: solar energy, wind energy, geothermal energy, hydropower, ocean energy, bioenergy, … The advantages of renewable energy are numerous and affect the economy, environment, national security, and human health Here are some of the benefits of using renewable energy in the world: Enhanced reliability, security, and resilience of the nation’s power grid Job creation throughout renewable energy industries Reduced carbon emissions and air pollution from energy production Increased U.S energy independence Increased affordability, as many types of renewable energy are cost-competitive with traditional energy sources Expanded clean energy access for non-grid-connected or remote, coastal, or island communities The percentage of renewable energy in WB is considered the percentage of consumption on renewable energy, in total of final energy consumption ASEAN's economy has grown rapidly for many years, leading to an increasing demand for energy According to the International Energy Agency (IEA), ASEAN's energy consumption has increased by 60% in the past 15 years The IEA predicts that ASEAN's energy demand could increase by another 66% by 2040 In ASEAN, Thailand has a great advantage in solar energy According to statistics, record investments are pouring into this sector The achievement is thanks to the Thai 13 r (TRO, TLF) = -0.3615 < 0: Moderate degree of correlation, shows the correlation between the gross domestic product per capita and total labor force is negative, the expectation is negative r (TRO, GFC) = 0.6753 > 0: Strong degree of correlation, shows the correlation between the gross domestic product per capita and gross fixed capital per capita is positive, the expectation is positive Correlation analysis between independent variables: r (REN, EIN) = - 0.0796 < 0: Show that the correlation between REN and EIN is in the opposite direction, the correlation is weak r (REN, URB) = - 0.8113 < 0: Show that the correlation between REN and URB is in the opposite direction, the correlation is very strong r (REN, TLF) = 0.0645 > 0: Show that the correlation between REN and TLF is in the same direction, the correlation is weak r (REN, GFC) = - 0.6269 < 0: Show that the correlation between REN and GFC is in the opposite direction, the correlation is strong r (URB, EIN) = 0.0339 > 0: Show that the correlation between URB and EIN is in the same direction, the correlation is weak r (URB, TLF) = - 0.1108 < 0: Show that the correlation between URB and TLF is in the opposite direction, the correlation is weak r (URB, GFC) = 0.8414 > 0: Show that the correlation between URB and GFC is in the same direction, the correlation is very strong r (EIN, TLF) = 0.0700 > 0: Show that the correlation between EIN and TLF is in the same direction, the correlation is weak r (EIN, GFC) = - 0.0185 < 0: Show that the correlation between EIN and GFC is in the opposite direction, the correlation is weak r (TLF, GFC) = - 0.3207 < 0: Show that the correlation between TLF and GFC is in the opposite direction, the correlation is moderate 14 CHAPTER ESTIMATED REGRESSION MODEL AND STATISTICAL INFERENCES 3.1 3.1.1 Estimated model results Regression Model Estimation Figure 3.4 Estimated model result (Source: STATA) 3.1.2 Sample regression model On the previous Sector, the team concluded the Sample Regression Model SRM: According to the estimated result from STATA using OLS method (Ordinary Least Squares method), we obtained the Sample Regression Model as below SRM: