Nonlinear globalization threshold effect of energy intensity convergence in Belt and Road countries

Abstract

This paper investigates the role of globalization, especially so-called threshold effect, in convergence of energy intensity along the Belt and Road countries during the period 1992–2016. Different from the previous studies, which primarily consider the linear effect and neglect the cross-sectional dependence of convergences, we construct a panel smooth transition regression model in this work, simultaneously taking dynamics, heterogeneity, non-linear and cross-sectional dependence characteristics into account. The results show that there exists a non-linear globalization threshold effect on the unconditional beta convergence, conditional beta convergence and club convergence of energy intensity, and the convergence becomes faster when the globalization level is above the threshold. These findings imply that a rise in the level of globalization contributes to the convergence of energy intensity in the Belt and Road countries; thus, governments in such countries could reduce energy intensity through increasing the level of globalization, which may in turn be achieved by deep cross-national cooperation in economic, social and political areas.