Convergence of Energy Intensity Across ASEAN-5 Countries: A Wavelet-Based Perspective

Abstract

The convergence hypothesis, which emphasizes the attainment of income equality among nations, has recently gained prominence in energy studies due to its pivotal role in addressing the pressing challenges at the intersection of economic development and energy sustainability. This investigation analyzes convergence in energy intensity within ASEAN-5 countries from 1980 to 2022. To this end, the maximal overlap discrete wavelet transform is employed, offering a comprehensive analysis of the series' short-, medium-, and long-run behavior by utilizing both time- and frequency-domain information. In contrast to previous studies, this research explicitly focuses on the total energy sector of the ASEAN-5 countries and offers policy recommendations for short-, medium-, and long-term implementation. When convergence within ASEAN-5 is assessed without accounting for different time scales, the findings indicate that the convergence hypothesis-based on conventional and Fourier-based unit root and stationarity tests-holds only for Malaysia and Singapore. However, by incorporating time- and frequency-domain information through wavelet transformation and decomposing the series into short-, medium-, and long-term components, stochastic convergence is identified across all ASEAN-5 countries. This finding is crucial for policymakers, as it enables the design and implementation of appropriate strategies. The decomposition demonstrates that energy cooperation among ASEAN-5 countries yields positive outcomes over the short, medium, and long term, thereby indicating effective policy integration.