Financial Development and Energy Poverty in Latin America

This work estimates financial development to energy poverty correlation in Latin America through the entropy method, the Principal Component Analysis, and an econometric analysis from 1990 to 2018. The PCA analysis reveals financial development and foreign direct investment as the key variables with PCA1 scores of 18.19 percent and 18.12 percent, respectively. Other variables, government policy, GDP per capita, and population density, follow with 14.82 percent, 11.96 percent, and 11.43 percent, respectively. Energy poverty scores of Latin American countries are less than unitary, making up for 17.54 percent, which implies that 17.45 percent of the residents did not attain the efficiency frontier of adequate energy consumption. Within all quantiles, the results elucidate that increases in energy poverty are attributed to low levels of financial development. This work is the first of its kind, analysing the association of multidimensional energy poverty and financial advancement in the Latin American region