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Renewable energy, R&D, and economic complexity: New evidence for Latin America using quantile regressions

Abstract:

Several countries in Latin America have increased the generation and consumption of renewable energy to achieve sustainable development formulated by the United Nations, particularly in the Seventh Sustainable Development Goal-SDG7. However, the region faces an accelerated population concentration process that demands energy regardless of the source that generates it. This research aims to examine the role of R&D and economic complexity on the consumption of renewable energy in 18 countries of Latin America during 1995-2017. To avoid the stiffness of the slope of traditional models, we use quantile regressions for panel data. We include covariates to capture the impact of other sources of renewable energy consumption. The results we find are highly heterogeneous between the development levels of the region’s countries and between the quantiles. In general, we find that R&D increases the consumption of renewable energy and economic complexity decreases it. The covariates’ results show that capital formation, natural resources reduce the consumption of renewable energy. At the same time, we find that agriculture and private cbkp_redit increase renewable energy consumption. While the product, property rights, and foreign direct investment have a heterogeneous impact between the quantiles. Policymakers should guide the effort in productive specialization to achieve SDG7.