Does geopolitics have an impact on energy trade? Empirical research on emerging countries

Fen Li, Cunyi Yang , Zhenghui Li , Pierre Failler

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Abstract

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 energy trade of vari-ous 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 fixed-effect model and regression-discontinuity (RD) model to verify the negative impact of ge-opolitics 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 energy trade, and the inhibition on the export is greater than that on the import. Second, the impact mechanism of geopolitics on 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 continues to be significant in 10 months. Coal and crude oil prices, as mediating variables, decrease to reduce the imports and exports, while natural gas prices show an increase. Third, the impact of geopolitics on energy trade is heterogeneous in terms of national attribute characteristics and geo-event types.
Original languageEnglish
Article number5199
Number of pages24
JournalSustainability
Volume13
Issue number9
DOIs
Publication statusPublished - 6 May 2021

Keywords

  • Geopolitics
  • energy trade
  • fixed effect model
  • regression discontinuity design
  • event type

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