A comparative analysis of trade exposure and human capability in Indonesian growth and emissions dynamics

Abstract Understanding whether economic growth can be decoupled from environmental pressure is central to the energy–economy–environment nexus (3E nexus). Evidence remains limited for economies that combine developing-country growth pressures, net energy-exporting status, and structurally complex transition challenges, such as Indonesia. This study compares two alternative macro-structural configurations within a unified 3E system: an export-inclusive specification containing energy exports and an HDI-inclusive specification containing human development. A Vector Error Correction Model is estimated using quarterly data from 2000Q1 to 2022Q4, complemented by reduced-form impulse responses and Granger-predictive tests. In the main quarterly estimates, the GDP-related level-feedback term is positive in the export-inclusive specification and negative in the HDI-inclusive specification; the descriptive sign contrast indicates sensitivity to model specification. Across both specifications, electricity and non-electric energy use remain important emissions constraints. In Indonesia, these constraints operate within a fossil-intensive energy sector characterized by strong state involvement and regulation across electricity and fuel supply. This combination resembles evidence from many fossil-resource exporters and ASEAN peers, where capability gains can coexist with carbon lock-in; some developed economies, by contrast, have recorded emissions declines alongside a lower fossil share of energy and reduced final energy use. Policy should therefore channel capability gains, export revenues, and capital formation toward power-sector decarbonization, reduced direct fossil-fuel use, and cleaner productive investment, while accounting for Indonesia’s energy-sector governance and infrastructure constraints.