Renewable and non-renewable categories of energy consumption and trade: Do the development degree and the industrialization degree matter?

Abstract The current study discusses the linear and non-linear relationship between trade, and non-renewable and renewable energy consumption using data of 72 countries extending from 1990 to 2012. Our empirical models integrate some additional variables which affect the above-mentioned relationship such as GDP, CO 2 emissions, domestic resources abundance, and some interaction terms. The innovation of the paper is not only to compare between developed and developing countries but also between industrialized countries and non-industrialized ones by integrating some dummy variables into the models. The empirical results demonstrate that trade and energy consumption (renewable or non-renewable) have a mutually reinforcing linear relationship. Moreover, the validity of non-linear relationships is accepted only in the case of the impact of non-renewable on trade. This latter follows an inverted U-shape form in the case of developed and industrialized countries while a U-Shape one in the case of developing and non-industrialized countries. In addition, the findings indicate a positive contribution of GDP, capital, and labor on trade and energy consumption. However, CO 2 emissions and natural resource have positive impacts on trade and non-renewable energy while negative effect on renewable energy. It implies that policy makers should develop appropriate policies to profit from trade and energy consumption. Highlights • We investigate the linear and non-linear relationship between energy consumption (renewable or non-renewable), and trade. • We focus in developed versus developing countries and industrialized versus non-industrialized ones from 1990 to 2012. • We use GMM dynamic panel data models. • We state bidirectional linear links between trade and renewable energy consumption. • We obtain a non-linear impact of trade on non-renewable energy consumption against a linear effect in the opposite sense. [ABSTRACT FROM AUTHOR]