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Energy Abundance, Trade and Industry Location

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  • Reyer Gerlagh

    (Tilburg University, Netherlands)

  • Nicole A. Mathys

    (Swiss Federal Office of Energy and University of Neuchâtel,)

Abstract

We study the effect of countries’ energy abundance on trade and sector activity, conditional on sector’s energy intensity, using an unbalanced panel with 14 high-income countries from Europe, America and Asia, 10 broad sectors, and years 1970-1997. We find that (i) countries with large energy endowments have low energy prices, and are thus energy abundant both on micro and macro level. (ii) Energy abundant countries have a high level of energy embodied in exports relative to imports. (iii) Energy intensive sectors export from and (iv) have higher economic activity in energy abundant countries. (v) The trade and location effects increase with a sector’s exposure to international trade. In short, energy is a major driver for sector location through specialisation. We show that capital and energy are complements in the production function and use various controls in our analysis. The results give insights into delocalisation effects that may take place among rich countries with heterogeneous energy policy.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2011.03.

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Date of creation: Jan 2011
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Handle: RePEc:fem:femwpa:2011.03

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Related research

Keywords: Trade and the Environment; Pollution Haven; Factor Endowments; Industry Location;

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Cited by:
  1. Misato Sato & Karsten Neuhoff & Verena Graichen & Katja Schumacher & Felix Matthes, 2013. "Sectors under scrutiny – Evaluation of indicators to assess the risk of carbon leakage in the UK and Germany," Grantham Research Institute on Climate Change and the Environment Working Papers 113, Grantham Research Institute on Climate Change and the Environment.
  2. Irina Hotz, 2012. "Energy endowments, barriers to trade and industry location in Chinese provinces," IRENE Working Papers 12-02, IRENE Institute of Economic Research.
  3. Mulder, Peter & de Groot, Henri L.F., 2013. "Dutch sectoral energy intensity developments in international perspective, 1987–2005," Energy Policy, Elsevier, vol. 52(C), pages 501-512.
  4. Mathieu Bordigoni, 2013. "L'impact du coût de l'énergie sur la compétitivité de l'industrie manufacturière," Working Papers hal-00916123, HAL.
  5. Peter Mulder & Henri L.F. de Groot, 2012. "Dutch Sectoral Energy Intensity Developments in International Perspective, 1987-2005," Tinbergen Institute Discussion Papers 12-049/3, Tinbergen Institute.

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