A Panel Data Analysis of Energy Consumption and Trade Openness in Developing Countries

Abstract

The present study is carried out keeping the aim of investigating the role of Energy consumption in influencing Trade of developing countries. Developing countries are then divided into three groups based on their income (GNI per capita per year) i.e. low income (LDCs), middle income (MDCs) and high income (HDCs). Panel data of 69 developing countries is collected for the period from 1990 to 2014 using World Development Indicators. Im, Pesaran and Shin W test is applied to examine the stationary of the variables which suggest Panel ARDL as most suitable technique. Energy consumption provides positive impression in terms trade openness in low income, middle income and high income suggesting that higher will be the energy use, the higher will be the trade in developing economies. In developing countries, bi-directional causality is examined among Energy Consumption and Trade Openness.