Non-renewable energy effects of trade in intermediate and final products: Evidence from emerging industrial economies

Abstract

The interest in the trade–environment nexus is growing for emerging countries as their participation in world trade is increasing. However, the available evidence regarding the non-renewable energy effects of trade in intermediate and final products is limited. This study addresses this gap and investigates the separate effects of per capita exports and imports of intermediate and final products on per capita non-renewable energy supply (NES) in the case of 22 emerging industrial economies (EIEs) between 1995 and 2018. The study also considers per capita environmental inventions (EnvINV), industry value-added (IND), services value-added (SERV), and renewable energy supply (RES). After confirming that the modeled variables are cross-sectionally dependent, first-difference stationary, and cointegrated, the long-run heterogeneous coefficients are estimated through the common correlated effects mean group and augmented mean group estimators. Consistent results show that although both are positively associated with NES, the magnitudes of the impacts of intermediate product imports are higher than that of intermediate product exports. Similar effects are observed in the final product trade. The Dumitrescu–Hurlin test finds unidirectional causalities from all trade indicators to NES. Additional results reveal positive impacts of IND and SERV, negative effects of RES, and insignificant impacts of EnvINV. Several policy insights are provided to better inform practitioners about the environmental implications of emerging economies’ trade specialization pattern in energy-intensive global production networks.