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

Year 2019, Volume: 21 Issue: 2, 342 - 361, 26.08.2019

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.

References

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  • Aïssa, M. S. B., Jebli, M. B., & Youssef, S. B. (2014). Output, renewable energy consumption and trade in Africa. Energy Policy, 66, 11-18. doi: 10.1016/j.enpol.2013.11.023.
  • Apergis, N., and J. E. Payne. 2012. Renewable and non-renewable energy consumption-growth nexus: evidence from a panel error correction model. Energy Economics 34(3), 733-738. doi: 10.1016/j.eneco.2011.04.007.
  • Benhabib, J., and M. M. Spiegel. 2005. Human capital and technology diffusion. In Handbook of economic growth, ed. P. Aghion and S. Durlauf, vol. 1B, 935-966. Amsterdam: Elsevier.
  • Bhagwati, J. 1978. Anatomy and consequences of exchange control regimes. New York: Ballinger Publishing.
  • BP. (2018). Energy Outlook-2018 edition. BP, UK.
  • Cole, M. A. 2006. Does trade liberalization increase national energy use? Economics Letters 92(1), 108-112. doi: 10.1016/j.econlet.2006.01.018.
  • Dedeoglu, D., and H. Kaya. 2013. Energy use, exports, imports and GDP: new evidence from the OECD countries. Energy Policy 57, 469-476. doi: 10.1016/j.enpol.2013.02.016.
  • Dogan, E. 2015. Revisiting the relationship between natural gas consumption and economic growth in Turkey. Energy Sources, Part B: Economics, Planning, and Policy 10(4), 361-370. doi: 10.1080/15567249.2014.931486.
  • Dumitrescu, E. I., and C. Hurlin. 2012. Testing for Granger non-causality in heterogeneous panels. Economic Modelling 29(4), 1450-1460. doi: 10.1016/j.econmod.2012.02.014.
  • Erkan, C., M. Mucuk, and D. Uysal. 2010. The impact of energy consumption on exports: the Turkish case. Asian Journal of Business Management 2(1), 17-23.
  • Findlay, R. 1978. Relative backwardness, direct foreign investment, and the transfer of technology: a simple dynamic model. The Quarterly Journal of Economics 92(1), 1-16. doi: 10.2307/1885996.
  • Ho, C.Y., and K.W. Siu. 2007. A dynamic equilibrium of electricity consumption and GDP in Hong Kong: an empirical investigation. Energy Policy 35 (4), 2507–2513. doi: 10.1016/ j.enpol.2006.09.018.
  • Hossain, S. 2014. Multivariate granger causality between economic growth, electricity consumption, exports and remittance for the panel of three SAARC countries. European Scientific Journal 8(1), 347-376. doi: 10.19044/esj.2012.v8n1p%25p.
  • IEA. (2018). World Energy Outlook 2018. International Energy Agency, Paris.
  • Kahrl, F., & Roland-Holst, D. (2008). Energy and exports in China. China Economic Review, 19(4), 649-658. doi: 10.1016/j.chieco.2008.05.004.
  • Kao, C. 1999. Spurious regression and residual-based tests for cointegration in panel data. Journal of Econometrics 90(1), 1-44. doi: 10.1016/S0304-4076(98)00023-2.
  • Kohpaiboon, A. 2006. Foreign direct investment and technology spillover: A cross-industry analysis of Thai manufacturing. World Development 34(3), 541-556. doi: 10.1016/j. worlddev.2005.08.006.
  • Lach, L. 2015. Oil usage, gas consumption and economic growth: evidence from Poland. Energy Sources, Part B: Economics, Planning, and Policy 10(3), 223-232. doi: 10.1080/ 15567249.2010.543946.
  • Lean, H. H., and R. Smyth. 2010a. Multivariate Granger causality between electricity generation, exports and GDP in Malaysia. Energy 35(9), 3640–3648. doi: 10.1016/j.energy. 2010.05.008.
  • Lean, H. H., and R. Smyth. 2010b. On the dynamics of aggregate output, electricity consumption and exports in Malaysia: evidence from multivariate Granger causality tests. Applied Energy 87(6), 1963–1971. doi: 10.1016/j.apenergy.2009.11.017.
  • Lee, C. C., and C. P. Chang. 2008. Energy consumption and economic growth in Asianeconomies: a more comprehensive analysis using panel data. Resource and Energy Economics 30(1), 50-65. doi: 10.1016/j.reseneeco.2007.03.003.
  • Lise, W., and K. van Montfort. 2007. Energy consumption and GDP in Turkey: is there a cointegration relationship? Energy Economics 29(6), 1166-1178. doi: 10.1016/j.eneco. 2006.08.010.
  • Narayan, P. K., and R. Smyth. 2009. Multivariate Granger causality between electricity consumption, exports and GDP: evidence from a panel of Middle Eastern countries. Energy Policy 37(1), 229-236. doi: 10.1016/j.enpol.2008.08.020.
  • Nasreen, S., & Anwar, S. (2014). Causal relationship between trade openness, economic growth and energy consumption: A panel data analysis of Asian countries. Energy Policy, 69, 82-91. doi: 10.1016/j.enpol.2014.02.009.
  • Nelson, R. R., and E. S. Phelps. 1966. Investment in humans, technological diffusion and economic growth. American Economic Review 56(2), 69-76.
  • Ozturk, F. 2017. Energy consumption-GDP causality in MENA countries. Energy Sources, Part B: Economics, Planning, and Policy 12(3), 231-236. doi: 10.1080/15567249.2015. 1072597
  • Payne, J. E. 2010. Survey of the international evidence on the causal relationship between energy consumption and growth. Journal of Economic Studies 37(1), 53-95. doi: 10.1108/ 01443581011012261.
  • Pedroni, P. 1999. Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford Bulletin of Economics and Statistics 61(S1), 653-670. doi: 10.1111/ 1468-0084.0610s1653.
  • Pedroni, P. 2001. Fully modified OLS for heterogeneous cointegrated panels. In Nonstationary panels, panel cointegration, and dynamic panels, ed. B. H. Baltagi et al., vol. 15, 93-130. Emerald Group Publishing Limited.
  • Pedroni, P. 2004. Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric Theory 20(3), 597-625. doi: 10.1017/S0266466604203073.
  • Pesaran, M. H. 2003. A simple panel unit root test in the presence of cross section dependence. Cambridge Working Papers in Economics No. 0346. Faculty of Economics, University of Cambridge.
  • Pesaran, M. H. 2004. General diagnostic tests for cross section dependence in panels CESifo Working Paper Series No. 1229; IZA Discussion Paper No. 1240.
  • Pesaran, M. H. 2007. A simple panel unit root test in the presence of cross‐section dependence. Journal of Applied Econometrics 22(2), 265-312. doi: 10.1002/jae.951.
  • Sadorsky, P. 2011. Trade and energy consumption in the Middle East. Energy Economics 33(5), 739-749. doi: 10.1016/j.eneco.2010.12.012.
  • Sadorsky, P. 2012. Energy consumption, output and trade in South America. Energy Economics 34(2), 476-488. doi: 10.1016/j.eneco.2011.12.008.
  • Topcu, M., & Payne, J. E. (2018). Further evidence on the trade-energy consumption nexus in OECD countries. Energy Policy, 117, 160-165. doi: 10.1016/j.enpol.2018.03.007.
  • Walz, U. 1997. Innovation, foreign direct investment and growth. Economica 64(253): 63-79. doi: 10.1111/1468-0335.00064.
  • Westerlund, J. 2005. New simple tests for panel cointegration. Econometric Reviews 24(3), 297-316. doi: 10.1080/07474930500243019.
  • Xu, M., Li, R., Crittenden, J. C., & Chen, Y. (2011). CO2 emissions embodied in China's exports from 2002 to 2008: A structural decomposition analysis. Energy Policy, 39(11), 7381-7388. doi: 10.1016/j.enpol.2011.08.068.
  • Yang, H. Y. 2000. A note on the causal relationship between energy and GDP in Taiwan. Energy Economics 22(3), 309-317. doi: 10.1016/S0140-9883(99)00044-4.
  • Zhang, X. P., and X. M. Cheng. 2009. Energy consumption, carbon emissions, and economic growth in China. Ecological Economics 68(10), 2706-2712. doi: 10.1016/j.ecolecon.2009.05. 011.
Year 2019, Volume: 21 Issue: 2, 342 - 361, 26.08.2019

Abstract

References

  • A. Aslan. 2013. Energy consumption and GDP: the strong relationship in OECD countries. Energy Sources, Part B: Economics, Planning, and Policy 8(4), 339-345. doi: 10.1080 /15567240903502586.
  • Aïssa, M. S. B., Jebli, M. B., & Youssef, S. B. (2014). Output, renewable energy consumption and trade in Africa. Energy Policy, 66, 11-18. doi: 10.1016/j.enpol.2013.11.023.
  • Apergis, N., and J. E. Payne. 2012. Renewable and non-renewable energy consumption-growth nexus: evidence from a panel error correction model. Energy Economics 34(3), 733-738. doi: 10.1016/j.eneco.2011.04.007.
  • Benhabib, J., and M. M. Spiegel. 2005. Human capital and technology diffusion. In Handbook of economic growth, ed. P. Aghion and S. Durlauf, vol. 1B, 935-966. Amsterdam: Elsevier.
  • Bhagwati, J. 1978. Anatomy and consequences of exchange control regimes. New York: Ballinger Publishing.
  • BP. (2018). Energy Outlook-2018 edition. BP, UK.
  • Cole, M. A. 2006. Does trade liberalization increase national energy use? Economics Letters 92(1), 108-112. doi: 10.1016/j.econlet.2006.01.018.
  • Dedeoglu, D., and H. Kaya. 2013. Energy use, exports, imports and GDP: new evidence from the OECD countries. Energy Policy 57, 469-476. doi: 10.1016/j.enpol.2013.02.016.
  • Dogan, E. 2015. Revisiting the relationship between natural gas consumption and economic growth in Turkey. Energy Sources, Part B: Economics, Planning, and Policy 10(4), 361-370. doi: 10.1080/15567249.2014.931486.
  • Dumitrescu, E. I., and C. Hurlin. 2012. Testing for Granger non-causality in heterogeneous panels. Economic Modelling 29(4), 1450-1460. doi: 10.1016/j.econmod.2012.02.014.
  • Erkan, C., M. Mucuk, and D. Uysal. 2010. The impact of energy consumption on exports: the Turkish case. Asian Journal of Business Management 2(1), 17-23.
  • Findlay, R. 1978. Relative backwardness, direct foreign investment, and the transfer of technology: a simple dynamic model. The Quarterly Journal of Economics 92(1), 1-16. doi: 10.2307/1885996.
  • Ho, C.Y., and K.W. Siu. 2007. A dynamic equilibrium of electricity consumption and GDP in Hong Kong: an empirical investigation. Energy Policy 35 (4), 2507–2513. doi: 10.1016/ j.enpol.2006.09.018.
  • Hossain, S. 2014. Multivariate granger causality between economic growth, electricity consumption, exports and remittance for the panel of three SAARC countries. European Scientific Journal 8(1), 347-376. doi: 10.19044/esj.2012.v8n1p%25p.
  • IEA. (2018). World Energy Outlook 2018. International Energy Agency, Paris.
  • Kahrl, F., & Roland-Holst, D. (2008). Energy and exports in China. China Economic Review, 19(4), 649-658. doi: 10.1016/j.chieco.2008.05.004.
  • Kao, C. 1999. Spurious regression and residual-based tests for cointegration in panel data. Journal of Econometrics 90(1), 1-44. doi: 10.1016/S0304-4076(98)00023-2.
  • Kohpaiboon, A. 2006. Foreign direct investment and technology spillover: A cross-industry analysis of Thai manufacturing. World Development 34(3), 541-556. doi: 10.1016/j. worlddev.2005.08.006.
  • Lach, L. 2015. Oil usage, gas consumption and economic growth: evidence from Poland. Energy Sources, Part B: Economics, Planning, and Policy 10(3), 223-232. doi: 10.1080/ 15567249.2010.543946.
  • Lean, H. H., and R. Smyth. 2010a. Multivariate Granger causality between electricity generation, exports and GDP in Malaysia. Energy 35(9), 3640–3648. doi: 10.1016/j.energy. 2010.05.008.
  • Lean, H. H., and R. Smyth. 2010b. On the dynamics of aggregate output, electricity consumption and exports in Malaysia: evidence from multivariate Granger causality tests. Applied Energy 87(6), 1963–1971. doi: 10.1016/j.apenergy.2009.11.017.
  • Lee, C. C., and C. P. Chang. 2008. Energy consumption and economic growth in Asianeconomies: a more comprehensive analysis using panel data. Resource and Energy Economics 30(1), 50-65. doi: 10.1016/j.reseneeco.2007.03.003.
  • Lise, W., and K. van Montfort. 2007. Energy consumption and GDP in Turkey: is there a cointegration relationship? Energy Economics 29(6), 1166-1178. doi: 10.1016/j.eneco. 2006.08.010.
  • Narayan, P. K., and R. Smyth. 2009. Multivariate Granger causality between electricity consumption, exports and GDP: evidence from a panel of Middle Eastern countries. Energy Policy 37(1), 229-236. doi: 10.1016/j.enpol.2008.08.020.
  • Nasreen, S., & Anwar, S. (2014). Causal relationship between trade openness, economic growth and energy consumption: A panel data analysis of Asian countries. Energy Policy, 69, 82-91. doi: 10.1016/j.enpol.2014.02.009.
  • Nelson, R. R., and E. S. Phelps. 1966. Investment in humans, technological diffusion and economic growth. American Economic Review 56(2), 69-76.
  • Ozturk, F. 2017. Energy consumption-GDP causality in MENA countries. Energy Sources, Part B: Economics, Planning, and Policy 12(3), 231-236. doi: 10.1080/15567249.2015. 1072597
  • Payne, J. E. 2010. Survey of the international evidence on the causal relationship between energy consumption and growth. Journal of Economic Studies 37(1), 53-95. doi: 10.1108/ 01443581011012261.
  • Pedroni, P. 1999. Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford Bulletin of Economics and Statistics 61(S1), 653-670. doi: 10.1111/ 1468-0084.0610s1653.
  • Pedroni, P. 2001. Fully modified OLS for heterogeneous cointegrated panels. In Nonstationary panels, panel cointegration, and dynamic panels, ed. B. H. Baltagi et al., vol. 15, 93-130. Emerald Group Publishing Limited.
  • Pedroni, P. 2004. Panel cointegration: asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric Theory 20(3), 597-625. doi: 10.1017/S0266466604203073.
  • Pesaran, M. H. 2003. A simple panel unit root test in the presence of cross section dependence. Cambridge Working Papers in Economics No. 0346. Faculty of Economics, University of Cambridge.
  • Pesaran, M. H. 2004. General diagnostic tests for cross section dependence in panels CESifo Working Paper Series No. 1229; IZA Discussion Paper No. 1240.
  • Pesaran, M. H. 2007. A simple panel unit root test in the presence of cross‐section dependence. Journal of Applied Econometrics 22(2), 265-312. doi: 10.1002/jae.951.
  • Sadorsky, P. 2011. Trade and energy consumption in the Middle East. Energy Economics 33(5), 739-749. doi: 10.1016/j.eneco.2010.12.012.
  • Sadorsky, P. 2012. Energy consumption, output and trade in South America. Energy Economics 34(2), 476-488. doi: 10.1016/j.eneco.2011.12.008.
  • Topcu, M., & Payne, J. E. (2018). Further evidence on the trade-energy consumption nexus in OECD countries. Energy Policy, 117, 160-165. doi: 10.1016/j.enpol.2018.03.007.
  • Walz, U. 1997. Innovation, foreign direct investment and growth. Economica 64(253): 63-79. doi: 10.1111/1468-0335.00064.
  • Westerlund, J. 2005. New simple tests for panel cointegration. Econometric Reviews 24(3), 297-316. doi: 10.1080/07474930500243019.
  • Xu, M., Li, R., Crittenden, J. C., & Chen, Y. (2011). CO2 emissions embodied in China's exports from 2002 to 2008: A structural decomposition analysis. Energy Policy, 39(11), 7381-7388. doi: 10.1016/j.enpol.2011.08.068.
  • Yang, H. Y. 2000. A note on the causal relationship between energy and GDP in Taiwan. Energy Economics 22(3), 309-317. doi: 10.1016/S0140-9883(99)00044-4.
  • Zhang, X. P., and X. M. Cheng. 2009. Energy consumption, carbon emissions, and economic growth in China. Ecological Economics 68(10), 2706-2712. doi: 10.1016/j.ecolecon.2009.05. 011.
There are 42 citations in total.

Details

Primary Language English
Journal Section Main Section
Authors

Devran Şanlı 0000-0003-4106-3799

Publication Date August 26, 2019
Published in Issue Year 2019 Volume: 21 Issue: 2

Cite

APA Şanlı, D. (2019). The long-run relationship between energy consumption and export sophistication in OECD countries. Ankara Hacı Bayram Veli Üniversitesi İktisadi Ve İdari Bilimler Fakültesi Dergisi, 21(2), 342-361.