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

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.

Automated summary

This research aims to explore the impact of trade openness, export concentration, and economic complexity on energy use in G7 countries from 1970 to 2020. Three empirical models based on population, affluence, and technology approach were constructed. The analysis shows a positive long-term relationship between per capita income, urbanization, trade openness, export concentration, economic complexity, and energy use. The findings suggest that economic complexity and export concentration can decrease energy consumption, while trade openness can lead to increased energy use. The policy direction should focus on energy conservation by enhancing the composition and technical effects of international trade while maintaining a lower energy consumption rate.