Abstract
Trade openness may support the economic growth of any country but its environmental effects due to increasing energy consumption cannot be ignored. This research hypothesizes the asymmetrical effects of both economic growth and trade openness on the energy consumption of Egypt from 1971–2014. Our estimates suggest that both economic growth and trade openness have asymmetrical effects on the energy consumption in both long and short runs because magnitude of the effects are found unequal. Both increasing and decreasing economic growth have positive effects on the energy consumption in the long and short runs except an insignificant effect of decreasing economic growth in the short run. Increasing and decreasing trade openness have also positive effects on the energy consumption in the long and short runs except an insignificant effect of decreasing trade openness in the long run. The increasing energy consumption, as results of increasing economic growth and/or trade openness, may have environmental consequence. Therefore, we recommend the Egyptian government to diversify the energy consumption from fossil fuel sources.
Highlights
Heckcher-Ohlin theory states that the nations may specialize in their production and international trade as per their abundant resources
To find the asymmetrical effects of trade openness and Gross Domestic Product (GDP) per capita on the per capita energy consumption, we use non-linear Auto Regressive Distributive Lag (ARDL) cointegration on a period of 1971–2014
We find that both positive and negative variables of GDP per capita have a positive effect on the per capita energy consumption but the magnitudes of effects are not statistically equal
Summary
Heckcher-Ohlin theory states that the nations may specialize in their production and international trade as per their abundant resources. PHH explains that dirty industries may shift from the developed world to the developing world to exploit the benefit of relatively cheaper labor and relaxed environmental regulations [1] In this case, demand for energy may increase in the developing countries due to shifting of manufacturing production activities mostly. The total effect of increasing trade openness may have different magnitude and/or direction of effect different than that of decreasing trade openness and assuming symmetry in the presence of statistically significant asymmetry may attempt the omitted variable biasness in the model [10,11,12] Considering this fact, this present research considers the asymmetry in the relationship of trade openness, economic growth and energy consumption which is missing in the energy consumption literature
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
