Abstract
In the context of intensifying global geopolitical disputes and trade frictions, the relationship between geopolitics and energy trade has attracted extensive attention from scholars. The complexity of geopolitical risks mainly comes from the diversity of geopolitical events, which directly leads to the different responses of energy trade in the face of geopolitical risks. The purpose of this paper is to analyze the heterogeneity of the impact of geopolitical events on energy trade based on the difference of event types. This paper uses Regression Discontinuity Design (RDD) to simulate a quasi-natural experiment. Based on the monthly data and the Geopolitical Risk index (GPR index) of 17 emerging economies from 2000 to 2020, the empirical analysis can be concluded as follows: Wars and conflicts events lead to the increase of energy trade volume; terrorist attacks have no significant impact on energy trade; international tension can cause the decline in energy trade. Additional analysis shows that the impact of geopolitical events on energy trade in emerging economies is concentrated on the demand side, and the demand is severely inelastic.
Highlights
Based on the monthly data of 17 sample emerging economies from 2000 to 2020, this paper uses the GPR index to determine the position of geopolitical risk discontinuity points, and empirically analyzes the heterogeneity of the impact of 15 geopolitical events on energy trade by means of RDD
This paper draws the following conclusions: 1) when the events of wars and conflicts occur, the energy trade volume of emerging economies usually shows a upward jump, which is mainly because wars and conflicts often occur in regions and countries with abundant energy resources, and the complex political situation will seriously affect the output and price of energy, resulting in the rise in energy trade in emerging economies
2) When terrorist attacks occur, the energy trade volume of emerging economies is usually not affected, which is reflected in the fact that there is no significant jump in the energy trade variable before and after the event, indicating that the impact of the terrorist attack on the global situation will not spread to the energy trade field, and the real economy is not affected much
Summary
The energy transition is transforming global geopolitics: the US shale oil revolution, China’s energy transition and global efforts to combat climate change are increasingly reducing the dependence on oil. This global energy transition has complex and far-reaching geopolitical implications, including triggering new competition among economies and creating winners and losers in a new energy order. The increasingly tense geopolitical relations have led to increasing challenges to energy security for all countries: the situation in the oil-producing region of the Middle East is tense; the United States has imposed sanctions on Iran because of the nuclear issue, which seriously threatens the security of oil and gas supply and channels; the disputes over the control of offshore oil and gas. The rest of this paper is structured as follows: the first part is the introduction of empirical facts and the summary of existing literature; the second section puts forward the research hypotheses based on the simple analysis of the relationship between geopolitical events and energy trade, and introduces the model and data of the empirical research in this paper; the third section uses RDD to analyze the heterogeneity of the impact of three geopolitical events on the energy trade of emerging economies; in the fourth section, the robustness test is carried out from the perspective of validity, algorithm and Bootstrap; the fifth section gives the basic conclusions and policy implications
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