Does Geopolitics Have an Impact on Energy Trade? Empirical Research on Emerging Countries

Fen Li, Cunyi Yang, Zhenghui Li and Pierre Failler
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Fen Li: School of Marxism, Hunan Institute of Technology, Hengyang 421001, China
Zhenghui Li: Guangzhou Institute of International Finance, Guangzhou 510405, China
Pierre Failler: Department of Economics and Finance, Portsmouth Business School, University of Portsmouth, Portsmouth P01 3DE, UK

Sustainability, 2021, vol. 13, issue 9, 1-24

Abstract: The energy trade is an important pillar of each country’s development, making up for the imbalance in the production and consumption of fossil fuels. Geopolitical risks affect the energy trade of various countries to a certain extent, but the causes of geopolitical risks are complex, and energy trade also involves many aspects, so the impact of geopolitics on energy trade is also complex. Based on the monthly data from 2000 to 2020 of 17 emerging economies, this paper employs the fixed-effect model and the regression-discontinuity (RD) model to verify the negative impact of geopolitics on energy trade first and then analyze the mechanism and heterogeneity of the impact. The following conclusions are drawn: First, geopolitics has a significant negative impact on the import and export of the energy trade, and the inhibition on the export is greater than that on the import. Second, the impact mechanism of geopolitics on the energy trade is reflected in the lagging effect and mediating effect on the imports and exports; that is, the negative impact of geopolitics on energy trade continued to be significant 10 months later. Coal and crude oil prices, as mediating variables, decreased to reduce the imports and exports, whereas natural gas prices showed an increase. Third, the impact of geopolitics on energy trade is heterogeneous in terms of national attribute characteristics and geo-event types.

Keywords: geopolitics; energy trade; fixed effect model; regression discontinuity design; event type (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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