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Can green trade development promote energy security in China? The role of financial development

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  • Li, Jiaman
  • Dong, Jiajia
  • Liu, Guixian
  • Taghizadeh-Hesary, Farhad

Abstract

Energy security is an essential component of overall national security. This paper investigates the impact of green trade (GRTR) on China's energy security and financial development's role in this nexus. The energy security evaluation index in this study is constructed from availability, applicability, acceptability, and affordability (the 4-As) and calculated by employing the Improved Entropy Method (IEM). Based on the two-step robust system-generalized method of moments (SYS-GMM) and data from China's 30 provinces between 2004 and 2020, this article investigates the impact of GRTR on energy security, the moderating effect of financial development and the impact mechanism of renewable energy development on the GRTR-energy security nexus. Our econometric analysis results indicate that increased GRTR can notably enhance energy security, and financial development can strengthen the positive impact of GRTR on energy security. The advancement of GRTR contributes positively to enhanced energy availability, acceptability, and affordability, but it could potentially decrease progress in the applicability of energy security; the promoting effect of GRTR on energy security in low-GRTR areas will be limited. The results of the mediating mechanism indicate that GRTR can accelerate energy security growth through renewable energy development. These insights provide policy implications for combining GRTR incentives to promote energy security.

Suggested Citation

  • Li, Jiaman & Dong, Jiajia & Liu, Guixian & Taghizadeh-Hesary, Farhad, 2024. "Can green trade development promote energy security in China? The role of financial development," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1840-1858.
    • Handle: RePEc:eee:ecanpo:v:84:y:2024:i:c:p:1840-1858
    DOI: 10.1016/j.eap.2024.11.005
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    More about this item

    Keywords

    Green trade; Energy security; Financial development; IEM; SYS-GMM;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment

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