IDEAS home Printed from https://ideas.repec.org/a/sae/engenv/v36y2025i2p638-659.html

The impact of trade openness, export concentration and economic complexity on energy demand among G7 countries

Author

Listed:
  • Muhlis Can
  • Daniel Balsalobre-Lorente
  • Festus Fatai Adedoyin
  • Mehmet Mercan

Abstract

This research attempts to explore the scale (trade openness), composition (export concentration) and technique effect (economic complexity) of international trade on energy use in the sample of G7 nations over the period 1970 and 2020 separately. To do that, we build up three empirical models based on the regression on population, affluence and technology approach. The analysis outcomes indicated a positive long-run link between per capita income, urbanization, trade openness, export concentration, economic complexity and energy use across the three models. The outcomes obtained from long-run estimations provide evidence that economic complexity and export concentration decreases energy consumption. Besides, empirical findings show that trade openness boosts energy use. Based on the detailed empirical research, the direction for the policy is that they should harness more strength on energy conservation by increasing the composition and technical effects of international trade. They should also focus on improving the countries’ economic freedom (trade openness) while maintaining energy consumption at a lower rate.

Suggested Citation

  • Muhlis Can & Daniel Balsalobre-Lorente & Festus Fatai Adedoyin & Mehmet Mercan, 2025. "The impact of trade openness, export concentration and economic complexity on energy demand among G7 countries," Energy & Environment, , vol. 36(2), pages 638-659, March.
    • Handle: RePEc:sae:engenv:v:36:y:2025:i:2:p:638-659
    DOI: 10.1177/0958305X231177740
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0958305X231177740
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0958305X231177740?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
    ---><---

    References listed on IDEAS

    as
    1. Shahbaz, Muhammad & Khan, Saleheen & Tahir, Mohammad Iqbal, 2013. "The dynamic links between energy consumption, economic growth, financial development and trade in China: Fresh evidence from multivariate framework analysis," Energy Economics, Elsevier, vol. 40(C), pages 8-21.
    2. Olivier Cadot & Céline Carrère & Vanessa Strauss-Kahn, 2011. "Export Diversification: What's behind the Hump?," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 590-605, May.
    3. Parteka, Aleksandra & Tamberi, Massimo, 2013. "Product diversification, relative specialisation and economic development: Import–export analysis," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 121-135.
    4. Jean Imbs & Romain Wacziarg, 2003. "Stages of Diversification," American Economic Review, American Economic Association, vol. 93(1), pages 63-86, March.
    5. Katircioglu, Salih Turan & Sertoglu, Kamil & Candemir, Mehmet & Mercan, Mehmet, 2015. "Oil price movements and macroeconomic performance: Evidence from twenty-six OECD countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 44(C), pages 257-270.
    6. Rafiq, Shuddhasattwa & Salim, Ruhul & Nielsen, Ingrid, 2016. "Urbanization, openness, emissions, and energy intensity: A study of increasingly urbanized emerging economies," Energy Economics, Elsevier, vol. 56(C), pages 20-28.
    7. Joakim Westerlund & David L. Edgerton, 2008. "A Simple Test for Cointegration in Dependent Panels with Structural Breaks," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(5), pages 665-704, October.
    8. Muhlis Can & Giray Gozgor, 2018. "Effects of export product diversification on quality upgrading: an empirical study," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 27(3), pages 293-313, April.
    9. Kishwar Nawaz & Amine Lahiani & David Roubaud, 2020. "Do natural resources determine energy consumption in Pakistan? The importance of quantile asymmetries," Post-Print hal-03558103, HAL.
    10. Giray Gözgör & Muhlis Can, 2017. "Causal Linkages among the Product Diversification of Exports, Economic Globalization and Economic Growth," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 888-908, August.
    11. Hu, Guoheng & Can, Muhlis & Paramati, Sudharshan Reddy & Doğan, Buhari & Fang, Jianchun, 2020. "The effect of import product diversification on carbon emissions: New evidence for sustainable economic policies," Economic Analysis and Policy, Elsevier, vol. 65(C), pages 198-210.
    12. John Berdell, 2002. "International Trade and Economic Growth in Open Economies," Books, Edward Elgar Publishing, number 809.
    13. Muhlis Can & Zahoor Ahmed, 2023. "Towards sustainable development in the European Union countries: Does economic complexity affect renewable and non‐renewable energy consumption?," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(1), pages 439-451, February.
    14. Kyophilavong, Phouphet & Shahbaz, Muhammad & Anwar, Sabeen & Masood, Sameen, 2015. "The energy-growth nexus in Thailand: Does trade openness boost up energy consumption?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 46(C), pages 265-274.
    15. Dingru, Liu & Onifade, Stephen Taiwo & Ramzan, Muhammad & AL-Faryan, Mamdouh Abdulaziz Saleh, 2023. "Environmental perspectives on the impacts of trade and natural resources on renewable energy utilization in Sub-Sahara Africa: Accounting for FDI, income, and urbanization trends," Resources Policy, Elsevier, vol. 80(C).
    16. T. S. Breusch & A. R. Pagan, 1980. "The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 47(1), pages 239-253.
    17. Adom, Philip Kofi, 2015. "Business cycle and economic-wide energy intensity: The implications for energy conservation policy in Algeria," Energy, Elsevier, vol. 88(C), pages 334-350.
    18. Alam, Md. Mahmudul & Murad, Md. Wahid, 2020. "The impacts of economic growth, trade openness and technological progress on renewable energy use in organization for economic co-operation and development countries," Renewable Energy, Elsevier, vol. 145(C), pages 382-390.
    19. Elodie Mania, 2020. "Export Diversification and CO2 Emissions: An Augmented Environmental Kuznets Curve," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(2), pages 168-185, March.
    20. Muhammad Shahbaz & Samia Nasreen & Chong Hui Ling & Rashid Sbia, 2014. "Causality between Trade Openness and Energy Consumption- What Causes What in High, Middle and Low Income Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 53(4), pages 423-459.
    21. Shahzad, Umer & Doğan, Buhari & Sinha, Avik & Fareed, Zeeshan, 2021. "Does Export product diversification help to reduce energy demand: Exploring the contextual evidences from the newly industrialized countries," Energy, Elsevier, vol. 214(C).
    22. Bashir, Muhammad Adnan & Sheng, Bin & Doğan, Buhari & Sarwar, Suleman & Shahzad, Umer, 2020. "Export product diversification and energy efficiency: Empirical evidence from OECD countries," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 232-243.
    23. Tekin, Rıfat Barış, 2012. "Economic growth, exports and foreign direct investment in Least Developed Countries: A panel Granger causality analysis," Economic Modelling, Elsevier, vol. 29(3), pages 868-878.
    24. Berger, Axel & Busse, Matthias & Nunnenkamp, Peter & Roy, Martin, 2011. "More stringent BITs, less ambiguous effects on FDI? Not a bit!," Economics Letters, Elsevier, vol. 112(3), pages 270-272, September.
    25. Wu, Rong & Wang, Jieyu & Wang, Shaojian & Feng, Kuishuang, 2021. "The drivers of declining CO2 emissions trends in developed nations using an extended STIRPAT model: A historical and prospective analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 149(C).
    26. Wei, Taoyuan, 2011. "What STIRPAT tells about effects of population and affluence on the environment?," Ecological Economics, Elsevier, vol. 72(C), pages 70-74.
    27. Giray Gozgor & Muhlis Can, 2016. "Effects of the product diversification of exports on income at different stages of economic development," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 6(2), pages 215-235, August.
    28. Joakim Westerlund, 2008. "Panel cointegration tests of the Fisher effect," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(2), pages 193-233.
    29. Jeroen Buysse & Muhlis Can & Giray Gozgor, 2018. "Globalisation outcomes and the real output in the sub-Saharan Africa LICs: a cointegration analysis," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 31(1), pages 338-351, January.
    30. Muhlis Can & Jan Brusselaers & Mehmet Mercan, 2022. "The effect of export composition on energy demand: A fresh evidence in the context of economic complexity," Review of Development Economics, Wiley Blackwell, vol. 26(2), pages 687-703, May.
    31. Amri, Fethi, 2019. "Renewable and non-renewable categories of energy consumption and trade: Do the development degree and the industrialization degree matter?," Energy, Elsevier, vol. 173(C), pages 374-383.
    32. Hausmann, Ricardo & Hidalgo, Cesar, 2014. "The Atlas of Economic Complexity: Mapping Paths to Prosperity," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262525429, December.
    33. Wang, Qiang & Li, Rongrong, 2016. "Drivers for energy consumption: A comparative analysis of China and India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 954-962.
    34. Swathi Markakkaran & Perumal Sridharan, 2022. "Impact of export diversification on economic growth: a system GMM approach," International Journal of Development Issues, Emerald Group Publishing Limited, vol. 21(2), pages 309-320, May.
    35. Betul Can & Zahoor Ahmed & Mahmood Ahmad & Muhlis Can, 2022. "Do renewable energy consumption and green trade openness matter for human well-being? Empirical evidence from European Union countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(3), pages 1043-1059, December.
    36. Sadorsky, Perry, 2011. "Trade and energy consumption in the Middle East," Energy Economics, Elsevier, vol. 33(5), pages 739-749, September.
    37. Shahbaz, Muhammad & Loganathan, Nanthakumar & Sbia, Rashid & Afza, Talat, 2015. "The effect of urbanization, affluence and trade openness on energy consumption: A time series analysis in Malaysia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 47(C), pages 683-693.
    38. Anwesha Aditya & Rajat Acharyya, 2013. "Export diversification, composition, and economic growth: Evidence from cross-country analysis," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(7), pages 959-992, October.
    39. Shujin Zhu & Renyu Li, 2017. "Economic complexity, human capital and economic growth: empirical research based on cross-country panel data," Applied Economics, Taylor & Francis Journals, vol. 49(38), pages 3815-3828, August.
    40. M. Hashem Pesaran & Aman Ullah & Takashi Yamagata, 2008. "A bias-adjusted LM test of error cross-section independence," Econometrics Journal, Royal Economic Society, vol. 11(1), pages 105-127, March.
    41. Dogan, Eyup & Altinoz, Buket & Madaleno, Mara & Taskin, Dilvin, 2020. "The impact of renewable energy consumption to economic growth: A replication and extension of Inglesi-Lotz (2016)," Energy Economics, Elsevier, vol. 90(C).
    42. Eberhardt, Markus & Bond, Stephen, 2009. "Cross-section dependence in nonstationary panel models: a novel estimator," MPRA Paper 17692, University Library of Munich, Germany.
    43. Matthias Busse & Jens Königer & Peter Nunnenkamp, 2010. "FDI promotion through bilateral investment treaties: more than a bit?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(1), pages 147-177, April.
    44. Dogan, Eyup, 2015. "The relationship between economic growth and electricity consumption from renewable and non-renewable sources: A study of Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 534-546.
    45. Josep Lluís Carrion-i-Silvestre & Tomás del Barrio-Castro & Enrique López-Bazo, 2005. "Breaking the panels: An application to the GDP per capita," Econometrics Journal, Royal Economic Society, vol. 8(2), pages 159-175, July.
    46. M. Hashem Pesaran, 2007. "A simple panel unit root test in the presence of cross-section dependence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 265-312.
    47. Dierk Herzer & Nowak-Lehnmann Felicitas, 2006. "What does export diversification do for growth? An econometric analysis," Applied Economics, Taylor & Francis Journals, vol. 38(15), pages 1825-1838.
    48. Tehreem Fatima & Grzegorz Mentel & Buhari Doğan & Zeeshan Hashim & Umer Shahzad, 2022. "Investigating the role of export product diversification for renewable, and non-renewable energy consumption in GCC (gulf cooperation council) countries: does the Kuznets hypothesis exist?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(6), pages 8397-8417, June.
    49. Jaimovich, Esteban, 2012. "Import diversification along the growth path," Economics Letters, Elsevier, vol. 117(1), pages 306-310.
    50. Tetsuya Tsurumi & Shunsuke Managi, 2010. "Decomposition of the environmental Kuznets curve: scale, technique, and composition effects," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 11(1), pages 19-36, February.
    51. Shahbaz, Muhammad & Gozgor, Giray & Hammoudeh, Shawkat, 2019. "Human capital and export diversification as new determinants of energy demand in the United States," Energy Economics, Elsevier, vol. 78(C), pages 335-349.
    52. Nasreen, Samia & Anwar, Sofia, 2014. "Causal relationship between trade openness, economic growth and energy consumption: A panel data analysis of Asian countries," Energy Policy, Elsevier, vol. 69(C), pages 82-91.
    53. Dedeoğlu, Dinçer & Kaya, Hüseyin, 2013. "Energy use, exports, imports and GDP: New evidence from the OECD countries," Energy Policy, Elsevier, vol. 57(C), pages 469-476.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sodiq Olaiwola Jimoh & Soo Khoon Goh & Oluwasegun Olawale Benjamin, 2026. "Trade integration and energy intensity in ASEAN: the moderating role of the digital economy," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 16(1), pages 447-472, March.

    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. Shahzad, Umer & Lv, Yulan & Doğan, Buhari & Xia, Wanjun, 2021. "Unveiling the heterogeneous impacts of export product diversification on renewable energy consumption: New evidence from G-7 and E-7 countries," Renewable Energy, Elsevier, vol. 164(C), pages 1457-1470.
    2. Muhlis Can & Zahoor Ahmed & Mahmood Ahmad & Ihsan Oluc, 2024. "Economic progress in emerging countries: the roles of diversification of import and export products and energy consumption," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(7), pages 18207-18229, July.
    3. Muhlis Can & Jan Brusselaers & Mehmet Mercan, 2022. "The effect of export composition on energy demand: A fresh evidence in the context of economic complexity," Review of Development Economics, Wiley Blackwell, vol. 26(2), pages 687-703, May.
    4. Cong Khai Dinh & Quang Thanh Ngo & Trung Thanh Nguyen, 2021. "Medium- and High-Tech Export and Renewable Energy Consumption: Non-Linear Evidence from the ASEAN Countries," Energies, MDPI, vol. 14(15), pages 1-16, July.
    5. Rehman, Faheem Ur & Islam, Md. Monirul & Raza, Syed Ali, 2023. "Does disaggregate energy consumption matter to export sophistication and diversification in OECD countries? A robust panel model analysis," Renewable Energy, Elsevier, vol. 206(C), pages 274-284.
    6. Junguo Shi & Hubert Visas & Jabbar Ul-Haq & Shujaat Abbas & Sana Khanum, 2023. "Investigating the impact of export product diversification on environmental degradation: evidence from Chinese Provinces," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11455-11486, October.
    7. Qamruzzaman, Md & Jianguo, Wei, 2020. "The asymmetric relationship between financial development, trade openness, foreign capital flows, and renewable energy consumption: Fresh evidence from panel NARDL investigation," Renewable Energy, Elsevier, vol. 159(C), pages 827-842.
    8. Doğan, Buhari & Ferraz, Diogo & Gupta, Monika & Duc Huynh, Toan Luu & Shahzadi, Irum, 2022. "Exploring the effects of import diversification on energy efficiency: Evidence from the OECD economies," Renewable Energy, Elsevier, vol. 189(C), pages 639-650.
    9. Qiang Wang & Fuyu Zhang & Rongrong Li, 2024. "Free trade and carbon emissions revisited: The asymmetric impacts of trade diversification and trade openness," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(1), pages 876-901, February.
    10. Muhlis Can & Zahoor Ahmed, 2023. "Towards sustainable development in the European Union countries: Does economic complexity affect renewable and non‐renewable energy consumption?," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(1), pages 439-451, February.
    11. Qiao, Hui & Chen, Siyu & Dong, Xiucheng & Dong, Kangyin, 2019. "Has China's coal consumption actually reached its peak? National and regional analysis considering cross-sectional dependence and heterogeneity," Energy Economics, Elsevier, vol. 84(C).
    12. Muhammad Shahbaz & Syed Jawad Hussain Shahzad & Mantu Kumar Mahalik & Perry Sadorsky, 2018. "How strong is the causal relationship between globalization and energy consumption in developed economies? A country-specific time-series and panel analysis," Applied Economics, Taylor & Francis Journals, vol. 50(13), pages 1479-1494, March.
    13. Tehreem Fatima & Grzegorz Mentel & Buhari Doğan & Zeeshan Hashim & Umer Shahzad, 2022. "Investigating the role of export product diversification for renewable, and non-renewable energy consumption in GCC (gulf cooperation council) countries: does the Kuznets hypothesis exist?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(6), pages 8397-8417, June.
    14. Hu, Guoheng & Can, Muhlis & Paramati, Sudharshan Reddy & Doğan, Buhari & Fang, Jianchun, 2020. "The effect of import product diversification on carbon emissions: New evidence for sustainable economic policies," Economic Analysis and Policy, Elsevier, vol. 65(C), pages 198-210.
    15. Madaleno, Mara & Ahmed, Zahoor & Doğan, Buhari & Javeed, Saba & Vasa, László, 2023. "The aptness of import-led growth hypothesis for sustainable development in South Asia: Do energy utilization and natural resources matter?," Resources Policy, Elsevier, vol. 86(PB).
    16. Shahzad, Umer & Doğan, Buhari & Sinha, Avik & Fareed, Zeeshan, 2021. "Does Export product diversification help to reduce energy demand: Exploring the contextual evidences from the newly industrialized countries," Energy, Elsevier, vol. 214(C).
    17. Rajesh Sharma & Muhammad Shahbaz & Pradeep Kautish & Xuan Vinh Vo, 2023. "Diversified imports as catalysts for ecological footprint: examining the BRICS experience," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(4), pages 3153-3181, April.
    18. Destek, Mehmet Akif & Hossain, Mohammad Razib & Aydın, Sercan & Shakib, Mohammed & Destek, Gamze, 2023. "Investigating the role of economic complexity in evading the resource curse," Resources Policy, Elsevier, vol. 86(PB).
    19. Chee-Hong Law & Siok Kun Sek, 2022. "Panel evidence of the dynamics between energy consumption and trade openness in ASEAN and East Asia," Energy & Environment, , vol. 33(3), pages 449-471, May.
    20. Gnangnon, Sèna Kimm, 2020. "Aid for Trade flows and Poverty Reduction in Recipient-Countries," EconStor Preprints 213807, ZBW - Leibniz Information Centre for Economics.

    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:sae:engenv:v:36:y:2025:i:2:p:638-659. 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: SAGE Publications (email available below). General contact details of provider: .

    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.