The long-run relationship between energy consumption and export sophistication in OECD countries

Abstract

The current research is an empirical investigation of the long-run and causal relation between energy consumption and export sophistication. It employs the panel cointegration analysis and cointegration regression using FMOLS and DOLS, for 31 OECD countries covering time span 1990–2016. The results show that there is strong bi-directional causality between variables. The energy consumption elasticities of high technology exports are comparatively high than medium and low tech export. The magnitude of the elasticity demonstrates that a 1% boost in energy consumption is expected to result in 0.81% growth in high technology export share. Moreover, any boost in a share of real investment is expected to have a powerful impact on high and medium tech export growth. It states that energy investment policies are expected to spur share of high technology exports in OECD countries. This paper is a pioneering study to investigated the relationship between energy consumption and export at the technology level.

Keywords

• Export Sophistication,Energy Consumption,Panel Cointegration

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