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Energy Abundance, Trade and Industry Location

Author

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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.

Suggested Citation

  • Reyer Gerlagh & Nicole A. Mathys, 2011. "Energy Abundance, Trade and Industry Location," Working Papers 2011.03, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2011.03
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    Cited by:

    1. 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.
    2. Mathieu Bordigoni, 2013. "L'impact du coût de l'énergie sur la compétitivité de l'industrie manufacturière," Working Papers hal-00916123, HAL.
    3. 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," GRI Working Papers 113, Grantham Research Institute on Climate Change and the Environment.
    4. Abay Mulatu & Ada Wossink, 2014. "Environmental Regulation and Location of Industrialized Agricultural Production in Europe," Land Economics, University of Wisconsin Press, vol. 90(3), pages 509-537.
    5. Sato, Misato & Dechezleprêtre, Antoine, 2015. "Asymmetric industrial energy prices and international trade," Energy Economics, Elsevier, vol. 52(S1), pages 130-141.
    6. Antoine Dechezlepr�tre & Caterina Gennaioli & Ralf Martin & Mirabelle Mu�ls, 2014. "Searching for carbon leaks in multinational companies," GRI Working Papers 165, Grantham Research Institute on Climate Change and the Environment.
    7. Wan, Jun & Baylis, Kathy & Mulder, Peter, 2015. "Trade-facilitated technology spillovers in energy productivity convergence processes across EU countries," Energy Economics, Elsevier, vol. 48(C), pages 253-264.
    8. Peter Egger & Sergey Nigai, 2015. "Energy Demand and Trade in General Equilibrium," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(2), pages 191-213, February.
    9. Irina Hotz, 2012. "Energy endowments, barriers to trade and industry location in Chinese provinces," IRENE Working Papers 12-02, IRENE Institute of Economic Research.

    More about this item

    Keywords

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

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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