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Renewable energy consumption, human capital index, and economic complexity in 16 Latin American countries: Evidence using threshold regressions

Abstract:

This research aims to examine the effect of the human capital index and the economic complexity index on renewable energy consumption through threshold regressions using data from 16 Latin American countries during 1990-2017. The thresholds used are the real output and the globalization index. Likewise, we include a set of covariates related to the industrial structure of the analyzed countries. Our results show that the human capital index and the economic complexity index have a heterogeneous impact on renewable energy consumption. The intensity of the real output effect on renewable energy consumption is higher in those Latin American economies that exceed the threshold. Likewise, we find that globalization favors renewable energy consumption when it exceeds the threshold, while below the threshold, the effect of globalization on renewable energy consumption is inverse. Our results suggest that knowledge and diversification are two mechanisms to promote increased renewable energy consumption.