Does Crude Oil Production Affect China's Historical Geopolitical Risk?

Osama Sweidan
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Osama Sweidan: Department of Economics and Finance, College of Business and Economics, UAE University, Al Ain

Economia Internazionale / International Economics, 2025, vol. 78, issue 3, 391-418

Abstract: Growing empirical research confirmed that geopolitical risk has significantly affected various economic variables. This study focuses on understanding geopolitical risk in-depth and exploring its determinants. It investigates if crude oil production affects China’s historical geopolitical risk. The current study constructs and estimates an empirical model using the bounds testing approach to cointegration in order to compute the ARDL model parameters over the period 1986: q1-2022: q1. It finds that crude oil production and prices are significant sources of China’s historical geopolitical risk. Moreover, a deterioration in the US economic competitiveness and growth rate will boost China’s historical geopolitical risk. From a policy implication standpoint, the race to control and lead the world will be a significant source of adverse shocks to the world economy. The economic variables, either quantitative or price indices, become a significant source of geopolitical risk among nations. Thus, it is necessary to establish a strong connection between nations worldwide. This is to ensure that the rivals reach a compromise.

La produzione di petrolio greggio influenza il rischio storico-geopolitico della Cina?

Un crescente filone di ricerca empirica ha confermato che il rischio geopolitico influenza significativamente le diverse variabili economiche. Questo studio è incentrato sulla comprensione dettagliata del rischio geopolitico e sull’esplorazione delle sue determinanti. Si esamina se la produzione di greggio ha riflessi sul rischio storico-geopolitico della Cina. In questo contributo si usa e stima un modello empirico basato su un approccio ARDL, relativamente al periodo 1986-2022. Dalle stime emerge che la produzione e il prezzo del greggio sono significative fonti di rischio storico-geopolitico per la Cina. Inoltre, un deterioramento della competitività e del tasso di crescita dell’economia USA renderebbe esplosivo questo rischio. Quanto alle implicazioni politiche, la corsa al controllo e alla guida del mondo rappresenta una fonte significativa di shock avversi per l’economia internazionale. Le variabili economiche, sia in termini quantitativi che di prezzi, rappresentano quindi un’importante motivo di rischio geopolitico tra le nazioni. Pertanto, diventa necessario stabilire una forte connessione tra le nazioni. Ciò affinché paesi rivali raggiungano un compromesso.

Keywords: China Economy; Crude Oil Production; Economic Competitiveness; Geopolitical Risk; The ARDL Model (search for similar items in EconPapers)
JEL-codes: C22 E02 F51 Q43 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ecoint:022216

DOI: 10.65644/EIIE.078.03.0391

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