The Thai government established a national strategy in 1990, which is still in effect, aimed at creating and maintaining sustainability. The government has also made an effort to promote the Industry 4.0 policy, with the aim of enhancing the development of the Thai economy and increasing the growth rate of the gross national product (GNP). In fact, Thailand has been supporting all sectors, especially industrial sector, in order to ensure their development and growth. Such promotion and supportive actions are provided through both aggressive and receptive strategies in various dimensions, in both the short-term (1–5 years) and long-term (10–20 years) [1
]. In the short run, immediate aggressive and receptive policies have been put into place to help generate a national revenue [3
]. These include measures in the industries of transportation, textiles, iron and steel, and other industrial products that are exclusively outside of the agricultural sector. In addition, with respect to the long run, the government has implemented a number of different strategies, such as promoting exports and diversifying products for export, encouraging foreign direct investment, developing the tourism industry, improving labor skills for heavy industry, expanding local markets for foreign investors, adjusting the tax basis, and developing large industries of the government among many others [4
The implementation of such policies aims to create economic growth, leading to an increasing rate of GNP growth. In addition, Thailand’s imports seem to be declining as the country expands its production base, enabling Thai industry to support internal consumption and domestic needs. In addition, the government has focused on the export of important products and sought to expand overseas export opportunities [5
]. For this reason, the Thai economy is being continuously developed, and managing to attract investment from various countries into heavy industry, generating national revenue. In fact, the Thai government has formulated a long-term strategy for economic and social development that focuses on various fields across all sectors, including increasing employment opportunity, providing services related to health and illness, strengthening social security and imposing greater consumer protection [7
]. These are positive developments that support economic and social growth—however, there are negative outcomes as well. For example, energy consumption and greenhouse gas emissions are found to be rising continuously (reference), especially in the industrial sector where these negative environmental trends date back to at least 1990. In particular, it has been found that increased production activity in Thailand has led to higher CO2
emissions in all sectors, including both industrial sectors and non-industrial sectors, resulting in an increase in greenhouse gases of up to 78.25% (2018) [8
]. Evidence suggests that the implementation of policies by the Thai government has led to economic and societal development, but that this has come at the cost of environmental deterioration, in part because the government policy suffered from a lack of clear environmental assessment tools [10
]. This lack of available tools needed to support formulation of national policies causing many errors in planning process [12
Industry 4.0-based government policy has had a positive effect on the Thai economy. However, if the policy is meant to create sustainability, then both social and environmental aspects should be given a boost at the same time, illustrating the efficiency of the appropriate government operation [14
]. This research, unfortunately, shows that Thailand still lacks important tools that are necessary for formulating policies. Hence, the researchers have attempted to develop a tool to facilitate in government policy formulation and planning by utilizing the second order autoregressive-SEM model. In addition to this modelling, optimization of the model for forecasting has been undertaken in an effort to examine the efficiency of the Industry 4.0 policy. Such forecasting includes predicting GNP and CO2
emission for the long term (2019–2035), which is a difficult and challenging task. This model also stands out from other existing models because of its suitability for application in different sectors.
2. Literature Review
This part offers a discussion and review of the existing literature and revisits relevant studies for a deeper understanding of the relationships and connections between factors affecting the subject of this paper. There have been a number of studies in this area of research, meaning that this paper is well-furnished with existing resources. Among the many studies, Oh and Shin [16
] investigated the future cash flow forecast information given by accounting and financial analysts of Korean listed firms for the years 2011 to 2015. Their findings indicate that the existence of an information-rich environment can reduce information asymmetry between the manager and the investor. He and Yin [17
] examined the influence of a firm’s deviant strategy on analysts’ earnings forecasts while exploring the topic of a firm’s information transparency and environmental uncertainty in terms of information asymmetry. They discovered that such a strategy has an effect on analysts’ earnings forecasts. Meanwhile, Dong et al. [18
] evaluated the relationship between outdoor air pollutants (PM10
), sulfur dioxide (SO2
) and nitrogen dioxide (NO2
), and mortality in China, and discovered a significant relationship between PM10
levels and mortality.
In addition to the investigation of these factor relationships, a number of studies have put forward different models to facilitate the work of forecasting. For example, Xu and Ren [19
] proposed a hybrid model based on an echo state network (ESN) and an improved particle swarm optimization (IPSO) algorithm to study air pollution in Beijing, while providing a forecasting method for particulate matter (PM2.5
). To this extent, their proposed model outperforms compared to comparative models. Zu and Ren [20
] also proposed a supplementary leaky integrator echo state network (SLI-ESN) for accurate forecasting the PM2.5
time series. This model has been validated and its prediction accuracy proven. The model demonstrates outstanding performance and excellence in application, as shown by the study’s finding. Tsui et al. [21
] carried out a study to forecast airport passenger traffic for Hong Kong airport through 2015 while estimating its future growth trend by deploying the Box-Jenkins Seasonal ARIMA (SARIMA) model and the ARIMAX model, which projected Hong Kong airport’s future passenger traffic to grow steadily, but at fluctuating rates. Moreover, Mahajan et al. [22
] developed an historical data-based method to forecast PM2.5
in Taiwan for 132 stations. The method was able to produce forecasting with error rates as low as 0.16 µg/m3
. In addition to this outcome, 90% of the monitoring stations have subsequently been found to be under 1.5 µg/m3
error. Huang et al. [23
] developed a novel forecasting method to predict multi-step short-term wind speed by adapting the ensemble empirical mode decomposition (EEMD). It has further been shown that this study’s developed model, as a result, can actually enhance the capacity of wind speed. Among many other potential models, Wu and Lin [24
] conducted a study with development of a hybrid wind speed forecasting model to better improve prediction performance by incorporating variational mode decomposition (VMD). The result of the study showed that the hybrid model has a greater accuracy in forecasting ultra-short-term (15 min) and short-term (1 h) wind speeds. Also, a systematic design of a multistage artificial neural network-based short-term load forecaster was developed to improve forecasting performance. With that, they found an error in forecasting, carried out by Methaprayoon et al. [25
]. Fan and Hyndman [26
] forecasted demand for electricity in the Australian National Electricity Market, saying that there should be different metrics and criteria for adaption of this forecast. As for Ramos and Oliveira [27
], they produced a cross-validation procedure to determine appropriate models: the autoregressive integrated moving average model and state space model. Based on their study, such cross-validation procedure has been used to support accurate forecasting and accuracy enhancement.
When it comes to forecasting energy consumption, a number of research studies have been conducted to investigate and estimate possible trends by proposing various models. Shi et al. [28
] improved wind power forecasting by developing a hybrid model incorporating with other single models, and their study outcome presents the validity of the hybrid as having greater application in very-short term forecasting of wind power. Hyndman and Fan [20
] forecasted the density of long-term peak electricity demand by proposing a new and systematic methodology, and the model outperforms others, as shown by the results of the study. In other research, Chen et al. [29
] developed a novel least-squares support vector regression with a Google (LSSVR-G) model to predict the power output from various sources in Taiwan, including renewable power, thermal power and nuclear power. The discussion of this study indicated that the proposed LSSVR-G model performs better than any previously studied models with respect to accuracy and stability. In another study, Lu et al. [30
] aimed to ameliorate the ultra-short-term accuracy of wind power forecasting. This led to the proposal of a novel hybrid wind power time series prediction model, adapting ensemble empirical mode decomposition-permutation entropy (EEMD-PE), the least squares support vector machine model (LSSVM), and gravitational search algorithm (GSA). There is no doubt that the proposed model outperforms the alternatives. Guan et al. [31
] contributed to the field of study by proposing an advanced load forecast (ALF) system with hierarchical forecasting capability, and it turned the system into a potential tool for distribution system load forecasting. Xie, Hong and Stroud [32
] predicted long-term retail energy requirements by doing a regression analysis and survival analysis. In this study, they uncovered the effectiveness of the approach, and demonstrated the superiority of the model to other models. Furthermore, Sun et al. [33
] set out to apply multi-step wind speed forecasting (WSF) to the development of a novel forecasting strategy. With such application of WSF, they illustrated the effectiveness of the proposed model, ensemble empirical mode decomposition (EEMD)/variational mode decomposition (VMD)-hybrid backtracking search optimization algorithm (HBSA)-double activations through weighted coefficient (DAWNN).
In Lithuania, Bobinaite et al. [34
] examined the linkage between economic growth (GDP) and renewable energy consumption (RES) by employing unit root, co-integration and Granger causality tests. Here, they have found a unidirectional relationship running from RES gross inland consumption to real GDP in the short run. The same relationship was also analyzed by Soava et al. [35
] in the EU with the application of panel data techniques. As for their finding, the influence of renewable energy consumption on economic growth was found to be positive. The same result has also been supported by Lots [36
], and Pao and Fu [37
]. Rafiq and Salim [38
] extended the same study to six emerging economies of Asia by using co-integration and vector error correction modeling. The same impact was found vary from country to country. On a bigger scale, the same linkage was studied by Chontanawat et al. [39
] with the use of a causality test, along with an illustration of the prevalent causality of developed OECD countries than any other developing non-OECD countries. However, Pao and Fu added non-renewable energy into the relationship in the Brazilian context with the use of the co-integration test and found the linkage of the additional variable on primary energy consumption to be insignificant. In the same case of the EU context, Sterpu et al. [40
] further addressed the investigation into the causal relationship between per capita greenhouse gas (GHG) emissions, gross domestic product, gross inland energy consumption, and renewable energy consumption by testing the environmental Kuznets curve (EKC) hypothesis via a panel co-integration approach. Their study indicates that there will be a rise of GHGs when gross energy consumption rises. In contrast, GHGs will be reduced when renewable energy consumption increases. In India, Jiang, Yang and Li [41
] used metabolic grey model (MGM), autoregressive integrated moving average (ARIMA), MGM-ARIMA, and back propagation neural network (BP) in their work to estimate energy demand. The study indicates a 5% growth in energy consumption from 2017 to 2030. Wang, Zhan and Li [42
] investigated and forecast energy demand in Middle Africa for 14 years (2017–2030). Their forecast projects a growth rate of 5.37% in energy demand. At around the same time, Ma et al. [43
] adopted the linear (metabolic grey model), nonlinear (non-linear grey model), and combined (metabolic grey model-autoregressive integrated moving average model) models to predict South Africa’s coal consumption for the years 2017 to 2030. The forecasting outcome of this study predicts a downward trend for these years (2017 to 2030), with a resulting drop of 1.9% per year, on average. Boyd et al. [44
] optimized the ARIMA model to forecast daily influent to wastewater treatment plants (WWTPs). In this study, it was shown that the ARIMA model can actually produce more reliable daily influent forecasts, which can be further extended to include municipal and rural WWTPs, with enough information. In Sweden, Al-Douri et al. [45
] generated a novel two-level multi-objective genetic algorithm (GA) to develop forecasting data for fans used in road tunnels by the Swedish Transport Administration (Trafikverket). The algorithm developed in this study demonstrated better performance than alternative models. In South Korea, Alsharif et al. [46
] attempted to forecast daily and monthly solar radiation for 37 years (1981–2017) by developing a seasonal auto-regressive integrated moving average (SARIMA) model. The daily solar radiation was handled by the ARIMA model, while the monthly solar radiation was handled by the seasonal ARIMA; the average monthly solar radiation projected was in the range of 176 to 377 Wh/m2
There have also been studies aimed at improving forecasting capacity and accuracy. Liu et al. [47
] deployed fuzzy combination weights, the empirical mode decomposition process, support vector machine and the Kalman filtering process, to develop a hybrid forecasting model capable of outperforming in forecasting and producing accurate results. Lee and Lin [48
] attempted to develop an SVR-based load forecasting model deploying quantum behaviors and the TS algorithm along with vector regression for forecasting enhancement. Their study demonstrated that the proposed model is superior to other alternatives. Cai et al. [49
] collaborated to develop a new hybrid model, integrating support vector regression (SVR), artificial bee colony (ABC) algorithm (ABC-SVR), and seasonal autoregressive integrated moving average (SARIMA) models. This hybrid model is expected to produce more accuracy in forecasting compared to other models. Lastly, Liu et al. [50
] came up with a practical methodology for the use of quantile regression in order to support the probabilistic load forecasts, and that method was found by the authors of the study to be effective and efficient.
Based on a review of relevant studies, it can be concluded that research in this area differs from other existing studies, in that the second order autoregressive-SEM is a model that comes with high validity and the ability to close research gaps left by other studies. In fact, this research uses advanced statistics and detailed research procedures, enabling optimal results for determining long-term national policies to be generated while reducing potential errors. In addition, this research offers a newly developed model, making it different from models of the past. Its unique features include the adjustment ability to equilibrium, and applicability to various sectors. It is also important to understand that some previous studies did not consider certain issues, such as heteroskedasticity, multicollinearity, and autocorrelation in their analysis. Yet, this research ensures that those issues were carefully taken into account through in-depth analysis. Moreover, these studies have left some gaps, in that they did not consider the analysis of stationarity and co-integration of the model’s variables. Therefore, this piece of research attempts to bridge those gaps in order to produce accurate outcomes of the research, and that ensures the absence of the model’s spuriousness. Also, the exogenous variables were carefully selected for this particular model. The research applies the linear structural relations (LISREL) while deploying time series data from 1990 to 2018 for the prediction of gross national product (GNP) growth rate and CO2
emissions during 2020 to 2035. The research flow can be explained as shown in Figure 1
Select variables for use in constructing the second order autoregressive-SEM, in which objectives have been specified by the government in the national strategy. The latent variables are political policy , the economy , and the environment , while the observed variables are national income , urbanization rate , industrial structure , net exports , foreign investment , foreign tourism , employment , government investment , government subsidy , technology investment , energy consumption , energy intensity , and carbon dioxide emission . The reason of considering the observed variables is to formulate a national objective of Thailand in terms of political policy , which emphasizes three main indicators: government investment , government subsidy , and technology investment . The indicators in economy are inclusive of national income , urbanization rate , industrial structure , net exports , foreign investment , foreign tourism , and employment , while the indicators in environment are energy consumption , energy intensity , and carbon dioxide emissions .
Ensure all observed variables to be stationary at the first difference level, based on the concept of the augmented Dickey–Fuller [51
Analyze the co-integration, based on the concept of the Johansen and Juselius [52
Test the validity of the second order autoregressive-SEM [55
Compare the performance of the second order autoregressive-SEM with other models, including ML model, BP model, ANN model, gray model, and ARIMA model. through the performance measures of MAPE and RMSE [57
Forecast GNP and CO2 emission by deploying the second order autoregressive-SEM for the years 2020 to 2035, as shown in the following diagram.
5. Conclusions and Discussion
This research proposes the adoption of second order autoregressive-SEM by using advanced statistics to analyze the influential magnitude of causal relationships, and to forecast such influence on economic and environmental factors under the Industry 4.0 policy imposed by the federal government of Thailand. The software utilized in the analysis was LISREL, which is the most suitable software for this type of advanced statistics. This research was carried out through application of research principles considering the characteristics of the causal factors in establishing a long-term forecasting model. In choosing all causal factors for this model, only identified actual causal factors were taken for analysis by ensuring each factor become stationary at the first difference, while all variables were co-integrated at the same level. The variables are national income (), urbanization rate (), industrial structure (), net exports (), foreign investment (), foreign tourism (), employment (), government investment (), government subsidy (), technology investment (), energy consumption (), energy intensity (), and carbon dioxide emission (). Such variables were selected in order to develop the second order autoregressive-SEM. This model has validity and features of the best model, heteroskedasticity, multicollinearity, autocorrelation and non-normality are absent. Hence, it can reflect actual relationships of latent variables, including political policy , economy , and environment . It also shows us the magnitude of impact for both direct and indirect effects in the model. Furthermore, the three latent variables have direct effect and indirect effect at the significance level of 1% and 5%.
Moreover, the second order autoregressive-SEM, as measured by MAPE and RMSE, outperformed other models, ARIMA model, gray model, ANN model, BP model, and ML model, used by the government as a tool for formulating policies for Thailand in the past. Hence, the second order autoregressive-SEM is found suitable to use for a long-term forecasting (2020–2035), as claimed by Oh and Shin [16
] under the title of A Study on the Relationship between Analysts Cash Flow Forecasts Issuance and Accounting Information, Jiang et al. [41
] under the title of Comparison of Forecasting India’s Energy Demand Using an MGM, ARIMA Model, MGM-ARIMA Model, and BP Neural Network Model, Wang et al. [42
] under the title of Prediction of the Energy Demand Trend in Middle Africa—A Comparison of MGM, MECM, ARIMA and BP Model, Ma et al. [43
] under the title of Predicting Coal Consumption in South Africa Based on Linear (Metabolic Grey Model), Nonlinear (Non-Linear Grey Model), and Combined (Metabolic Grey Model-Autoregressive Integrated Moving Average Model) Models, Boyd et al. [44
] under the title of Influent Forecasting for Wastewater Treatment Plants in North America, Al-Douri et al. [45
] under the title of Time Series Forecasting Using a Two-Level Multi-Objective Genetic Algorithm: A Case Study of Maintenance Cost Data for Tunnel Fans, and Alsharif et al. [46
] under the title of Time Series ARIMA Model for Prediction of Daily and Monthly Average Global Solar Radiation: The Case Study of Seoul, South Korea.
The model, when put to use, forecasts significant and steady economic growth as measured by GNP. At the same time, carbon dioxide emission , as an environmetal indicator, is forecast to increase continuously from 2020–2035, and is further projected to exceed the limit set by Thailand of 80 Mt CO2 Eq. (2035). By 2035, it is predicted that the carbon dioxide emission will climb to 97.52 Mt CO2 Eq.
This study indicates that the Industry 4.0 policy implemented by the government in Thailand is still inefficient, and that it will not lead to sustainability in the future. The study further shows that the error correction mechanism of the environmental aspect has the weakest ability to adjust toward equilibrium as compared to the economy and political policy, respectively. The previous implementation of past policies has led to economic growth but has also significantly damaged the environment. This phenomenon, if continued, will contribute negatively to the future of Thailand. Moreover, if the environment is devastated, it will be very difficult to retreat and recover. Therefore, the government needs to adopt new tools for formulating the national policies and planning in order to prevent losses that cannot be recovered in the future.
As for recommendations for future applications of this research, the researchers created a high-quality second order autoregressive-SEM to replace the old models used in the past. The second order autoregressive-SEM comes with good validity and distinctive features, making it different from other existing models. This is because the model considers the features of causal factors, and deep understanding of modelling was made as to generate the best model. This helps indicate the impact magnitude of causal factors in both direct and indirect effects while reflecting the adjustment ability to equilibrium. Therefore, if the government is determined to continue implementing and enforcing the Industry 4.0 policy in Thailand, then it must proceed with caution and prudence, while making use of quality tools to determine the outcomes and achieve the optimal positive effect of the national strategy in the long term. Therefore, selecting this tool for national policy formulation and planning becomes significant and necessary in order to successfully implement policies of the highest quality and efficiency. In addition to this importance, with the application of this research outcome in different contexts and sectors, future research should ensure the validity of the model, especially the estimated values from the model, so as to reduce potential errors or spuriousness. Also, they should consider certain variables, that are stationary and co-integrated in the same level for their research. This consideration will allow them to better understand direct and indirect effects.
An additional benefit of the model developed in this research is that it is an instrumental model that shows the impact magnitude. If any change occurs from one side of the model’s equations, it will also affect the projected outcomes on the other side, with different impact magnitude. Hence, the government has to take into account clearly how the plans are to be implemented in order to minimize the negative impact on the environment and set goals in order to create appropriate outcomes. This concern can be addressed by using the Second Order Autoregressive-SEM described in this research as a guide to formulation of the right policies for different sectors of the Thai economy.
This limitation of this research is that some causal factors could not be taken into account because the government does not allow those factors to float freely in the economy. For instance, all oil prices in the country are subject to government intervention from time to time, so they do not reflect the actual prices from a global market. Other variables could include foreign investment projects that are not specified in the national strategy. All these limitations are seen to be important elements in the Industry 4.0 policy, and therefore they cannot be used as variables in this study’s model.