Exploring the Impact of Export Diversification on Energy-Mix Diversification: Role of Institutional Quality, Foreign Direct Investments and Research & Development

Muhammad Shahbaz, Cem Işık, Serdar Ongan and Bekhzod Kuziboev

Politická ekonomie, vol. preprint

Abstract: This research investigates the effects of export diversification (henceforth, EXD) on energy mix diversification for 26 European Union (EU) countries. To achieve this aim, we employ the quantile regression model and GMM estimator for 1995-2020. The primary outcome of this study is to identify the complexity of such two crucial factors. At lower levels of diversification, EXD has a negative impact on energy mix diversification; however, this effect becomes positive at higher level diversification. This situation underscores the significance of considering this factor when formulating energy policies. Specifically, exploring strategies to increase EXD in countries with limited energy diversity may be necessary. On the other hand, promoting EXD in countries with abundant energy diversity can contribute to a more robust and sustainable energy sector. This finding emphasizes the necessity of adopting an integrated approach in developing and implementing energy and export policies. The quantile regression analysis using different quantiles (percentages) can ensure quantile-based customized policies and strategies between export and energy diversifications to the EU policymakers. Therefore, EU policymakers should consider creating and implementing foreign trade and energy policies in a coordinated manner.

Keywords: Energy diversification; export diversification; EU countries; panel quantile regression; GMM; low-high quantiles (search for similar items in EconPapers)
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DOI: 10.18267/j.polek.1509

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