Asymmetric nexus of green energy inclusion and green trade spillover effects on economic growth: Insights from China's experience for EAC-6

Abstract

The quick progress of green energy solutions has led to increased academic focus on their economic consequences. This study provides a comparative study regarding the asymmetric nexus among the novel green energy inclusivity index (IGE), novel green trade spillover effects (GTS), and economic growth. The analysis employed a non-linear autoregressive distributed lagged model (NARDL) and asymmetric causality test using data from 1990 to 2022 in the China and East Africa Community (EAC-6). The findings revealed a pronounced asymmetric convergence across the variables in both countries, with IGE and GTS negative shocks having a stronger impact than positive ones. In insights from China's Experience for EAC, while these results keep robust after conducting quantile regressions and other robust checks, in China both novel green energy inclusivity and novel green trade spillover effects positive shocks have a stronger effect on economic growth than EAC for both short and long terms. Furthermore, the feedback green energy-led growth hypothesis and the feedback green trade spillover effects-led growth hypothesis are confirmed in both countries. As a lesson learned, this study suggests the EAC countries take note of China's emphasis on developing a robust domestic manufacturing and supply chain for renewable energy technologies to potentially enhance more sustainable growth.