Economic progress in emerging countries: the roles of diversification of import and export products and energy consumption

Scholars have given enormous attention to the roles of energy use and trade in economic growth strategies; however, recent international trade literature suggests that not merely the volume of trade but the diversification of goods may have a potential effect on economic growth. Thus, this paper uses the diversification of export goods and diversification of import goods as explanatory variables along with energy consumption and assessed the role of these important variables in economic development. The empirical results from Westerlund's (J Appl Econom 23:193-233, 2008) and Westerlund's (Oxf Bull Econ Stat 69:709-748, 2007) tests disclosed the existence of cointegration. The long-run estimations obtained from the CUP-FM technique revealed that both import and export product diversifications positively influence economic growth. This presents a vital opportunity for emerging nations to expand growth by diversifying export and import products. Likewise, energy use, labor, and capital contribute to increasing economic growth. The estimates from the causality test illustrated bidirectional causality between export diversification and economic growth and unidirectional causality from energy to export diversification. Finally, policy suggestions to expand economic progress are discussed.

Automated summary

Scholars have researched the roles of energy use and trade in economic growth strategies. Recent international trade literature suggests that the diversification of goods may also have an impact on economic growth. This paper examines the influence of export and import product diversification, as well as energy consumption, on economic development. The results reveal that both export and import diversifications positively affect economic growth, providing emerging nations with an opportunity for expansion. Furthermore, energy use, labor, and capital contribute to increasing economic growth. The findings suggest policy suggestions for promoting economic progress.