Does disaggregate energy consumption matter to export sophistication and diversification in OECD countries? A robust panel model analysis

Abstract

In recent years, most countries have shown keen interest in achieving spectacular economic development through diversifying and sophisticating their export growths. This growth uprising process requires energy consumption. Amid this scenario, this study delves into whether the disaggregate energy consumption (renewable and non-renewable) promotes export diversification and sophistication strategies in OECD countries during 1990–2019. The contribution of this study is to construct two novel indices, e.g., export diversification and sophistication and incorporate them into the study model as the dependent variables. Moreover, using the CS-ARDL approach, the study finds that disaggregate energy consumption contributes to spurring export diversification and sophistication for the OECD countries where non-renewable energy consumption's influence is more potent than renewable energy. Besides, the regressors, such as FDI, human capital, and institutional quality, also promote export diversification and sophistication in the OECD countries. Finally, this research validates the findings yielded from the CS-ARDL method by employing the System GMM (SGMM) approach due to the endogeneity issue appearing in the panel data. This study puts notable policy recommendations based on explored findings.