Energy Security of the European Union: The Relationship between Energy Import Dependency and Economic Growth

Serap Elustu ()
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Serap Elustu: Institute of Social Sciences, Department of Economics, Istanbul, Turkey, Istanbul University, Istanbul, Turkey

Istanbul Journal of Economics-Istanbul Iktisat Dergisi, 2021, vol. 71, issue 1, 133-162

Abstract: Energy markets have an oligopolistic structure based on global geographic conditions, which necessitates the import of energy products. Having a robust energy dependency on the Russian Federation and the Middle East and North African (MENA) region renders the European Union (EU) vulnerable in terms of both energy security and trade. This study analyzes the relationship between economic growth and energy import dependency, coupled with the import of oil and petroleum products, natural gas, and solid fuels in EU member and candidate countries between 2014 and 2018 through panel data analysis using the Driscoll-Kraay estimator. Key findings reveal that the effect of natural gas and solid fuel imports on economic growth is statistically insignificant, whereas the effect of oil and petroleum product imports on economic growth is statistically significant and positive and the effect of energy import dependency on economic growth is statistically significant and negative. Oil and petroleum products are mostly used in transportation, and services have the highest share in the EU’s gross domestic product (GDP); thus, the use of oil and petroleum products in the EU supports economic growth. The use of oil and petroleum products depends on imports, as the EU does not have sufficient internal sources. Increased energy efficiency and use of renewable energies may decrease energy import dependence and reduce the use of non-renewable energy products procured from external suppliers. If importing is a mandate, then diversifying exporters could minimize the risk of arising shortages from suppliers.

Keywords: European Union; Energy Import Dependency; Energy Security; Economic Growth; Panel Data Analysis JEL Classification : Q43; O47; O52 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ist:journl:v:71:y:2021:i:xi:p:133-162

DOI: 10.26650/ISTJECON2021-942116

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