Renewable and non-renewable categories of energy consumption and trade: Do the development degree and the industrialization degree matter?

The current study discusses the linear and non-linear relationship between trade, and non-renewable and renewable energy consumption using data of 72 countries extending from 1990 to 2012. Our empirical models integrate some additional variables which affect the above-mentioned relationship such as GDP, CO2 emissions, domestic resources abundance, and some interaction terms. The innovation of the paper is not only to compare between developed and developing countries but also between industrialized countries and non-industrialized ones by integrating some dummy variables into the models. The empirical results demonstrate that trade and energy consumption (renewable or non-renewable) have a mutually reinforcing linear relationship. Moreover, the validity of non-linear relationships is accepted only in the case of the impact of non-renewable on trade. This latter follows an inverted U-shape form in the case of developed and industrialized countries while a U-Shape one in the case of developing and non-industrialized countries. In addition, the findings indicate a positive contribution of GDP, capital, and labor on trade and energy consumption. However, CO2 emissions and natural resource have positive impacts on trade and non-renewable energy while negative effect on renewable energy. It implies that policy makers should develop appropriate policies to profit from trade and energy consumption.