Dynamic links between economic complexity, technological innovation, structural transformation and energy...

The active industrial activities, urbanization, globalization and rapid economic development have stimulated the energy demand of newly industrialized countries, prompting renewable energy to be replaced by cheaper and more readily available fossil fuel energy, thus leading to environmental pollution. This study therefore explores the impact of economic complexity, technological innovation and structural transformation on energy efficiency, fossil fuel energy demand and renewable energy generation in newly industrialized countries (NICs). This study differs from earlier studies in that it focuses on improving energy efficiency, renewable energy generation, and reducing fossil fuel energy as indicators of energy conservation and sustainability. This study employs the cross-sectional autoregressive distributed lag (CS-ARDL) technique to investigate both short- and long-term associations and examine the robustness of the results over the period 1985-2023. The results show that in the long run, each unit increase in economic complexity can improve energy efficiency by 0.265%, promote renewable energy generation by 0.327%, and reduce fossil fuel energy demand by 0.228%. Technological innovation has significant incremental impacts on energy efficiency and renewable energy, while having an adverse impact on fossil fuel energy in both the short- and long-term. However, GDP can greatly improve energy efficiency and renewable energy generation while boosting fossil fuel energy demand, but only in the long term. Industrial value added significantly reduces energy efficiency and renewable energy generation, while contributing to fossil fuel energy demand in both short- and long-term. The causality test support feedback hypothesis between GDP and fossil fuel energy. Comparative analysis shows that economic complexity and technological innovation contribute more to supporting energy efficiency and energy production than to mitigating fossil fuels, indicating the necessity of structural adjustment of economic activities and technological innovation. Policymakers should consider the empirical findings of this study to pave the way for a more sustainable and resilient economic and environmental future for newly industrialized countries through energy transition measures that focus on economic maturity and technological innovation to produce renewable energy.