Assessing the determinants of SIDS' pattern toward sustainability: A statistical analysis

The aim of this paper is twofold. First, we assess the SIDS' pattern towards energy sustainability. Second, we try to understand the macro factors that drive policy-makers in setting the optimal framework for investments in renewable energy sources. The empirical analysis is performed on a large dataset of 136 countries and 41 variables observed in the time span 2000-2011. Countries analyzed include a sample of 12 SIDS (Bahrain, Cuba, Dominican Republic, Fiji Islands, Guyana, Haiti, Jamaica, Maldives, Mauritius, Papua New Guinea, Singapore, Trinidad and Tobago) distributed worldwide. Due to the large number of variables collected and their high degree of collinearity, the first step of the analysis concerns the implementation of a Principal Component Analysis in order to extract factors explaining the majority of variation of the original variables. In the second step, three different scenarios of modeling are designed to examine the key factors promoting RES investments. In a first scenario, we employ a pooled regression model, in the second a Fixed Effect model and, in the third, a Random Effect model is estimated. The main results of empirical analysis could be unexpected at first sight. They show, in fact, that SIDS are not on a energy sustainability path. As in the case of other developing countries, policy-makers prefer to use resources to improve economic aspects of development leaving behind issues related to the environmental protection, the use of RES and sustainability. In order to improve economic and environmental resilience of SIDS a synergy between local governments and international organizations to promote the investments in RES is needed. Moreover, an energy plan that clearly supports the generation of energy from RES is recommended. Finally policy-makers should strength their commitment in raising population's awareness toward a green energy generation. Such synergic interventions will allow SIDS to achieve a more sustainable development.