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Impact of bilateral trade on fossil energy consumption in BRICS: An extended decomposition analysis

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  • Chen, Jiandong
  • Xie, Qiaoli
  • Shahbaz, Muhammad
  • Song, Malin
  • Li, Li

Abstract

This paper analyzes the impact of bilateral trade among the BRICS countries on fossil energy consumption. Trade costs and economic scales on both sides have barely been considered in previous literature when bilateral trade impacts fossil energy. Using export data, energy-related data, and the GDP from the BRICS countries from 2000 to 2019, we analyze the characteristics of trade-related factors driving fossil energy. To combine exports with the GDP of both sides, we embed the gravity equation into an index decomposition equation and find that bilateral trade increases fossil energy consumption. Trade increased fossil energy consumption through growing transportation volumes during 2000–2008, and transportation energy efficiency improvements under technological advances reduced fossil energy consumption during 2014–2018. Another channel is that trade increased fossil energy consumption by promoting economic development.

Suggested Citation

  • Chen, Jiandong & Xie, Qiaoli & Shahbaz, Muhammad & Song, Malin & Li, Li, 2022. "Impact of bilateral trade on fossil energy consumption in BRICS: An extended decomposition analysis," Economic Modelling, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:ecmode:v:106:y:2022:i:c:s026499932100287x
    DOI: 10.1016/j.econmod.2021.105698
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    More about this item

    Keywords

    Logarithmic-mean divisia index (LMDI); Gravity model; BRICS; Fossil energy consumption; Bilateral trade;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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