EMPIRICAL ANALYSIS OF SMES’ GREEN TRANSITION IN EAST ASIA: THE ROLE OF ECONOMIC FACTORS AND POLICY IMPLICATIONS

The energy transition of small and medium-sized enterprises (SMEs) in East Asia has become a crucial aspect of the region’s energy sustainability in recent years. This study examines the influence of the common prosperity index, FDI, GDP size, GINI index and urban population on SMEs’ energy transition in five East Asian countries — China, South Korea, Japan, Mongolia and Taiwan — using data from 1990 to 2021 and the ARDL estimation approach. The results indicate that a 1% increase in the common prosperity index leads to a 0.22–0.36% reduction in SMEs’ energy consumption, highlighting the role of socioeconomic development in improving energy efficiency. FDI significantly contributes to SMEs’ energy transition, with a 1% rise resulting in a 0.46% increase in the short term and 0.67% in the long term. Likewise, GDP growth of 1% enhances energy transition by 0.36% in the short term and 0.46% in the long term. However, a 1% increase in the urban population raises SMEs’ energy consumption by 0.09% in the short term and 0.14% in the long term. Sensitivity analysis reveals that SMEs’ energy transition is most influenced by FDI, whereas income inequality has a negligible effect. Based on these findings, policy recommendations include fostering socioeconomic development, attracting FDI, supporting economic growth, managing urbanization and addressing income inequality to facilitate SMEs’ energy transition.