Economic globalization-energy diversification nexus and implications for environmental management in China

Abstract

Every nation on earth has the responsibility to implement effective environmental management measures for sustainable environmental quality. In doing so, this study scrutinizes the relationship between economic globalisation and energy diversification in the Chinese economy from 1995 to 2022 for designing and implanting policies for environmental management. It uses industrialization, foreign direct investment, foreign remittances, and information & communication technology as supplementary factors into augmented energy diversification demand function. This empirical analysis shows cointegration between the variables, with economic globalisation positively impacting energy diversification. Factors such as foreign direct investment, foreign remittances, and information & communication technology contribute to energy diversity. However, industrialization has an adverse relationship with energy diversification. The relationship forms an inverted-U shaped between economic globalization and energy diversification. Our causality analysis indicates that economic globalization positively causes energy diversification. This study also reveals a reciprocal and beneficial cause-and-effect association between foreign direct investment and energy diversification. Lastly, foreign remittances and information & communication technologies positively cause energy diversification.

Keywords: China; Economic globalization; Energy diversification; Environmental management.