The Long-Run Relationship Between Energy Use and Export Sophistication in OECD Countries

Abstract

The current research is an empirical investigation of the long-run and causal relationbetween energy consumption and export sophistication. It employs the panel cointegrationanalysis and cointegration regression using FMOLS and DOLS, for 31 OECD countriescovering time span 1990–2016. The results show that there is strong bi-directional causalityrelation between variables. The energy consumption elasticities of high technology exportsare comparatively high than medium and low tech export. The magnitude of the elasticitydemonstrates that a 1% boost in energy consumption is expected to result in 0.81% growthin high technology export share. Moreover, any boost in a share of real investment isexpected to have a powerful impact on high and medium tech export growth. It states thatenergy investment policies are expected to spur share of high technology exports in OECDcountries. This paper is a pioneering study to investigated the relationship between energyconsumption and export at the technology level