Geopolitical risk and natural resources: A comparative analysis of trade integration in the African and European Unions

Sidra Nazir (), Oleg Mariev and Kazi Sohag

Natural Resources Forum, 2026, vol. 50, issue 1, 614-633

Abstract: Geopolitically induced energy insecurity can impede trade integration among different economic blocs. This study employs a novel, sophisticated Fourier‐augmented ARDL methodology to explore the relationship between energy commodity prices, geopolitical risks, and trade integration within the African Union (AU) and the European Union (EU) from January 2000 to December 2023. Amid increasing geopolitical tensions, this analysis uncovers distinct impacts on the trade dynamics of the AU and EU, highlighting the complex interplay between natural resource abundance and geopolitical risk. The empirical findings reveal that energy resource prices generally impede trade integration in both regions, supporting the natural resource curse hypothesis. However, geopolitical risk has a divergent effect, facilitating trade integration in the AU while hindering it in the EU. One of the novelties of this study is the use of the Fourier‐augmented ARDL approach, which accounts for multiple structural breaks in the data, providing robust results. Additionally, the study comparative analysis of AU and EU regional trade dynamics in the context of geopolitical risks is another significant contribution. The inclusion of precious metals and global supply chain variables provides deeper insights into regional trade dynamics, emphasizing the importance of proactive geopolitical risk management. The findings suggest that tailored policy measures aimed at leveraging natural resources effectively while mitigating geopolitical risks can pave the way for sustainable economic growth and integration in both the AU and EU.

Date: 2026
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https://doi.org/10.1111/1477-8947.12586

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Persistent link: https://EconPapers.repec.org/RePEc:wly:natres:v:50:y:2026:i:1:p:614-633

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