Can green trade development promote energy security in China? The role of financial development

Jiaman Li, Jiajia Dong, Guixian Liu and Farhad Taghizadeh-Hesary

Economic Analysis and Policy, 2024, vol. 84, issue C, 1840-1858

Abstract: Energy security is an essential component of overall national security. This paper investigates the impact of green trade (GRTR) on China's energy security and financial development's role in this nexus. The energy security evaluation index in this study is constructed from availability, applicability, acceptability, and affordability (the 4-As) and calculated by employing the Improved Entropy Method (IEM). Based on the two-step robust system-generalized method of moments (SYS-GMM) and data from China's 30 provinces between 2004 and 2020, this article investigates the impact of GRTR on energy security, the moderating effect of financial development and the impact mechanism of renewable energy development on the GRTR-energy security nexus. Our econometric analysis results indicate that increased GRTR can notably enhance energy security, and financial development can strengthen the positive impact of GRTR on energy security. The advancement of GRTR contributes positively to enhanced energy availability, acceptability, and affordability, but it could potentially decrease progress in the applicability of energy security; the promoting effect of GRTR on energy security in low-GRTR areas will be limited. The results of the mediating mechanism indicate that GRTR can accelerate energy security growth through renewable energy development. These insights provide policy implications for combining GRTR incentives to promote energy security.

Keywords: Green trade; Energy security; Financial development; IEM; SYS-GMM (search for similar items in EconPapers)
JEL-codes: F18 F43 O13 P28 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:84:y:2024:i:c:p:1840-1858

DOI: 10.1016/j.eap.2024.11.005

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