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Do geopolitical risks always harm energy security? Their non-linear effects and mechanism

Author

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  • Lee, Chien-Chiang
  • Yuan, Zihao
  • He, Zhi-Wen
  • Xiao, Fu

Abstract

Exploring the link between geopolitical risk (GPR) and energy security (ES) is essential for ensuring national security and sustainable economic development in the face of frequent global geopolitical conflicts and escalating geopolitical threats. Based on the newly developed GPR index, this research uses unbalanced panel data for 35 nations from 2005 to 2018 to examine the influence of GPR on ES and its impact mechanism. The results show that GPR causes the U-shape effect on ES that first decreases (GPR < 0.59) and then increases (GPR > 0.59), meaning that GPR causes both negative and positive effects on ES, and the results remain robust after a series of tests. Transmission mechanism analysis indicates that renewable energy technology innovation is the key transmission mechanism for the U-shape impact of GPR on ES. Moderating effect analysis shows that international trade reinforces the U-shape effect of GPR on ES, meaning that it reinforces both the negative and positive effects of GPR on ES, while FDI only reinforces the positive effect of GPR on ES. Heterogeneity analysis presents that the U-shape effect of GPR on ES is more significant in OECD countries and net energy-importing countries.

Suggested Citation

  • Lee, Chien-Chiang & Yuan, Zihao & He, Zhi-Wen & Xiao, Fu, 2024. "Do geopolitical risks always harm energy security? Their non-linear effects and mechanism," Energy Economics, Elsevier, vol. 129(C).
    • Handle: RePEc:eee:eneeco:v:129:y:2024:i:c:s0140988323007430
    DOI: 10.1016/j.eneco.2023.107245
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