IDEAS home Printed from https://ideas.repec.org/a/eee/eneeco/v144y2025ics0140988325001112.html
   My bibliography  Save this article

Going with the flow: How does global energy value chain adapt to geopolitical risks?

Author

Listed:
  • Nepal, Rabindra
  • Deng, Youyi
  • Dong, Kangyin

Abstract

Geopolitics is a significant risk that affects the global energy system and impacts countries' participation in the global energy value chain (EGVC). Based on this, this paper provides a thorough analysis and empirical examination of the impact of geopolitics risks (GPR) on the EGVC with 41 countries around the world from 2010 to 2019. The results of the study found that: (1) Compared to energy importing countries, energy exporting countries have lower participation and are in the upstream of EGVC, obtaining less value added. (2) The GPR can reduce EGVC participation and push countries to move upstream of EGVC, thus crowding out activities with higher value-added such as new energy technology innovation while guaranteeing energy security. (3) Influenced by trade barriers and other factors, GPR affects countries' participation in EGVC mainly by reducing the scale of international trade, and the increase in the level of financial development can mitigate the impact of the GPR on EGVC. (4) The quantile regression results show that GPR affects countries' participation in EGVC mainly by increasing the level of forward participation as well as decreasing the level of backward participation, and GPR has a greater impact on countries located upstream and with higher participation in the EGVC. This study contributes to the research on EGVC and guides for countries to participate in EGVC under uncertain external conditions.

Suggested Citation

  • Nepal, Rabindra & Deng, Youyi & Dong, Kangyin, 2025. "Going with the flow: How does global energy value chain adapt to geopolitical risks?," Energy Economics, Elsevier, vol. 144(C).
    • Handle: RePEc:eee:eneeco:v:144:y:2025:i:c:s0140988325001112
    DOI: 10.1016/j.eneco.2025.108288
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0140988325001112
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eneco.2025.108288?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Pata, Ugur Korkut & Alola, Andrew Adewale & Erdogan, Sinan & Kartal, Mustafa Tevfik, 2023. "The influence of income, economic policy uncertainty, geopolitical risk, and urbanization on renewable energy investments in G7 countries," Energy Economics, Elsevier, vol. 128(C).
    2. Mignon, Valérie & Saadaoui, Jamel, 2024. "How do political tensions and geopolitical risks impact oil prices?," Energy Economics, Elsevier, vol. 129(C).
    3. Dario Caldara & Matteo Iacoviello, 2022. "Measuring Geopolitical Risk," American Economic Review, American Economic Association, vol. 112(4), pages 1194-1225, April.
    4. Sami Alpanda & Adrian Peralta-Alva, 2010. "Oil Crisis, Energy-Saving Technological Change and the Stock Market Crash of 1973-74," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(4), pages 824-842, October.
    5. Ma, Dan & Tang, Jiaqi & Jiang, Xuemei, 2023. "Effects of digital global value chain participation on CO2 emissions embodied in digital exports: New evidence from PSTR approach," Energy Economics, Elsevier, vol. 126(C).
    6. Pata, Ugur Korkut & Yilanci, Veli & Zhang, Qianxiao & Shah, Syed Ale Raza, 2022. "Does financial development promote renewable energy consumption in the USA? Evidence from the Fourier-wavelet quantile causality test," Renewable Energy, Elsevier, vol. 196(C), pages 432-443.
    7. Yang, Tianle & Dong, Qingyuan & Du, Min & Du, Qunyang, 2023. "Geopolitical risks, oil price shocks and inflation: Evidence from a TVP–SV–VAR approach," Energy Economics, Elsevier, vol. 127(PB).
    8. Coniglio, Nicola Daniele & Peragine, Vitorocco & Vurchio, Davide, 2023. "The effects of refugees’ camps on hosting areas: Social conflicts and economic growth," World Development, Elsevier, vol. 168(C).
    9. Ajide, Folorunsho M. & Sakariyahu, Rilwan & Lawal, Rodiat & Etudaiye-Muhtar, Oyebola Fatima & Johan, Sofia, 2023. "Mobile money innovation and global value chain participation: Evidence from developing countries," Finance Research Letters, Elsevier, vol. 58(PD).
    10. Razi, Ummara & Karim, Sitara & Cheong, Calvin W.H., 2024. "From turbulence to resilience: A bibliometric insight into the complex interactions between energy price volatility and green finance," Energy, Elsevier, vol. 304(C).
    11. Lin, Boqiang & Li, Minyang, 2023. "Emerging Industry Development and Information Transmission in Financial Markets: Evidence from China's Renewable Energy," Energy Economics, Elsevier, vol. 128(C).
    12. Zhang, Bin & Liu, Zuyao & Wang, Zhaohua & Zhang, Shuang, 2023. "The impact of geopolitical risk on energy security: Evidence from a GMM panel VAR approach," Resources Policy, Elsevier, vol. 86(PB).
    13. Yang, Changjiang & Yan, Xiaoxuan, 2023. "Impact of carbon tariffs on price competitiveness in the era of global value chain," Applied Energy, Elsevier, vol. 336(C).
    14. Wu, X.F. & Chen, G.Q., 2017. "Global primary energy use associated with production, consumption and international trade," Energy Policy, Elsevier, vol. 111(C), pages 85-94.
    15. Stöllinger, Roman, 2021. "Testing the Smile Curve: Functional Specialisation and Value Creation in GVCs," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 93-116.
    16. Zhao, Dong & Sibt e-Ali, Muhammad & Omer Chaudhry, Muhammad & Ayub, Bakhtawer & Waqas, Muhammad & Ullah, Irfan, 2024. "Modeling the Nexus between geopolitical risk, oil price volatility and renewable energy investment; evidence from Chinese listed firms," Renewable Energy, Elsevier, vol. 225(C).
    17. Graf, Holger & Mohamed, Hoda, 2024. "Robotization and employment dynamics in German manufacturing value chains," Structural Change and Economic Dynamics, Elsevier, vol. 68(C), pages 133-147.
    18. Liu, Yang & Wang, Jianda & Dong, Kangyin & Taghizadeh-Hesary, Farhad, 2023. "How does natural resource abundance affect green total factor productivity in the era of green finance? Global evidence," Resources Policy, Elsevier, vol. 81(C).
    19. Chen, Wei & Niu, Xiaoyu & Ke, Wenqian & Yu, Zhaoyuan, 2023. "Investigating the energy trade networks in the Belt and Road regions: Structures and evolution," Energy, Elsevier, vol. 283(C).
    20. Rubio, M.d.Mar & Folchi, Mauricio, 2012. "Will small energy consumers be faster in transition? Evidence from the early shift from coal to oil in Latin America," Energy Policy, Elsevier, vol. 50(C), pages 50-61.
    21. Chen, Limei & Gozgor, Giray & Mahalik, Mantu Kumar & Pal, Shreya & Rather, Kashif Nesar, 2023. "How does geopolitical risk affect CO2 emissions? The role of natural resource rents," Resources Policy, Elsevier, vol. 87(PB).
    22. Cheng, Natalie Fang Ling & Hasanov, Akram Shavkatovich & Poon, Wai Ching & Bouri, Elie, 2023. "The US-China trade war and the volatility linkages between energy and agricultural commodities," Energy Economics, Elsevier, vol. 120(C).
    23. Liu, Wei & Chen, Xiao & Zhang, Jihong, 2023. "The Russia-Ukraine conflict and the automotive energy transition: Empirical evidence from China," Energy, Elsevier, vol. 284(C).
    24. Deng, Youyi & Dong, Kangyin & Taghizadeh-Hesary, Farhad & Xue, Jinjun, 2023. "How does environmental regulation affect the double dividend for energy firms? Evidence from China’s EPT policy," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 807-820.
    25. Chen, Yufeng & Zhang, Shun & Miao, Jiafeng, 2023. "The negative effects of the US-China trade war on innovation: Evidence from the Chinese ICT industry," Technovation, Elsevier, vol. 123(C).
    26. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    27. Zhou, Yi & Zhuo, Chengfeng & Deng, Feng, 2021. "Can the rise of the manufacturing value chain be the driving force of energy conservation and emission reduction in China?," Energy Policy, Elsevier, vol. 156(C).
    28. Maneejuk, Paravee & Kaewtathip, Nuttaphong & Yamaka, Woraphon, 2024. "The influence of the Ukraine-Russia conflict on renewable and fossil energy price cycles," Energy Economics, Elsevier, vol. 129(C).
    29. Cao, Lansheng & Gu, Ming & Jin, Ding & Wang, Changyan, 2023. "Geopolitical risk and economic security: Exploring natural resources extraction from BRICS region," Resources Policy, Elsevier, vol. 85(PB).
    30. Zhao, Chuan & Guo, Qidong & Jia, Rongwen & Dong, Kangyin & Wang, Kun, 2023. "How does clean energy transition promote original design manufacturers? A three-party evolutionary game analysis," Energy Economics, Elsevier, vol. 126(C).
    31. Robert Koopman & William Powers & Zhi Wang & Shang-Jin Wei, 2010. "Give Credit Where Credit Is Due: Tracing Value Added in Global Production Chains," NBER Working Papers 16426, National Bureau of Economic Research, Inc.
    32. Guo, Yani & Zheng, Haixia & Zeng, Yun & Fan, Wei & Albahooth, Bayan & Bhuiyan, Rubaiyat Ahsan, 2023. "Natural resources extraction of RCEP trade bloc: Examining geopolitical risk and economic situation," Resources Policy, Elsevier, vol. 86(PB).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Deng, Youyi & Dong, Kangyin & Sun, Qian & Xue, Jinjun, 2025. "Broadening energy resilience: How does the digital economy affect the global energy value chain?," Structural Change and Economic Dynamics, Elsevier, vol. 72(C), pages 111-121.
    2. Yilmazkuday, Hakan, 2024. "Geopolitical risks and energy uncertainty: Implications for global and domestic energy prices," Energy Economics, Elsevier, vol. 140(C).
    3. Huang, Zhuo & Ye, Chengfang & Lai, Fujun & Li, Yunzhong & Li, Xiaofan, 2024. "Dancing between threats and conflicts: How Chinese energy companies invest amidst global geopolitical risks," Energy Economics, Elsevier, vol. 139(C).
    4. Luo, Heng & Sun, Ying & Tao, Xiaosha & Tan, Wenwu & Kamarudin, Fakarudin, 2024. "Effects of global value chains on energy efficiency in G20 countries," Energy, Elsevier, vol. 313(C).
    5. Dong, Kangyin & Yang, Senmiao & Wang, Jianda & Nepal, Rabindra & Jamasb, Tooraj, 2024. "Does Geopolitical Risk Accelerate Climate Vulnerability? New Evidence from the European Green Deal," Working Papers 15-2024, Copenhagen Business School, Department of Economics.
    6. Lin, Boqiang & Zhang, Zongyou, 2025. "Geopolitics of renewable energy development: The role of energy metals," Energy Policy, Elsevier, vol. 198(C).
    7. Liu, Ling & Shahrour, Mohamad H. & Wojewodzki, Michal & Rohani, Alireza, 2025. "Decoding energy market turbulence: A TVP-VAR connectedness analysis of climate policy uncertainty and geopolitical risk shocks," Technological Forecasting and Social Change, Elsevier, vol. 210(C).
    8. Zhu, Zhimeng & Hunjra, Ahmed Imran & Alharbi, Samar S. & Zhao, Shikuan, 2025. "Global energy transition under geopolitical risks: An empirical investigation," Energy Economics, Elsevier, vol. 145(C).
    9. Zhang, Xiuqi & Meng, Xiangyu & Su, Chi Wei, 2024. "The security of energy import: Do economic policy uncertainty and geopolitical risk really matter?," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 377-388.
    10. António Afonso & José Alves & João Jalles & Sofia Monteiro & João Tovar Jalles, 2024. "Energy Price Dynamics in the Face of Uncertainty Shocks and the Role of Exchange Rate Regimes: A Global Cross-Country Analysis," CESifo Working Paper Series 11384, CESifo.
    11. Varga, Katalin & Szendrei, Tibor, 2025. "Non-stationary financial risk factors and macroeconomic vulnerability for the UK," International Review of Financial Analysis, Elsevier, vol. 97(C).
    12. Mignon, Valérie & Saadaoui, Jamel, 2024. "How do political tensions and geopolitical risks impact oil prices?," Energy Economics, Elsevier, vol. 129(C).
    13. Guo, Peng & Shi, Jing, 2024. "Geopolitical risks, investor sentiment and industry stock market volatility in China: Evidence from a quantile regression approach," The North American Journal of Economics and Finance, Elsevier, vol. 72(C).
    14. Giovanni Carnazza & Paolo Liberati & Agnese Sacchi, 2024. "Political instability and international trade in the European Union: A network-based approach," Discussion Papers 2024/319, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    15. Badran, Moustapha & Awada, Mohamed & Darwiche, Joanna & Boungou, Whelsy, 2025. "How do geopolitical risks and uncertainty shape US consumer confidence?," Economics Letters, Elsevier, vol. 247(C).
    16. Lee, Chien-Chiang & Chen, Mei-Ping, 2020. "Do natural disasters and geopolitical risks matter for cross-border country exchange-traded fund returns?," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).
    17. Qin, Yun & Hong, Kairong & Chen, Jinyu & Zhang, Zitao, 2020. "Asymmetric effects of geopolitical risks on energy returns and volatility under different market conditions," Energy Economics, Elsevier, vol. 90(C).
    18. Kamal, Javed Bin & Wohar, Mark & Kamal, Khaled Bin, 2022. "Do gold, oil, equities, and currencies hedge economic policy uncertainty and geopolitical risks during covid crisis?," Resources Policy, Elsevier, vol. 78(C).
    19. Mustafa Tevfik Kartal & Ugur Korkut Pata, 2024. "Do Depth, Accessibility, and Efficiency of Financial Institutions Matter for Renewable Energy Development in Azerbaijan?," Journal of Sustainable Development Issues (JOSDI), SDIjournals, vol. 2(1), pages 42-50, June.
    20. De Oliveira Amado, Cristina Alexandra & Garrón Vedia, Ignacio & Lopes Moreira da Veiga, María Helena, 2024. "On the relationship of country geopolitical risk on energy inflation," DES - Working Papers. Statistics and Econometrics. WS 45113, Universidad Carlos III de Madrid. Departamento de Estadística.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:144:y:2025:i:c:s0140988325001112. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eneco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.