Relationship between Trade Openness and Energy Consumption in Oil Importing Asian Countries

Research Article

The present study intended to examine the impact of trade on energy consumption using data of four oil importing, heavily populated, and developing economies of Asia namely Pakistan, India, China and Bangladesh. The study covers the period of 1972 to 2011. The data was checked for the Cross-sectional Dependency using CD-test, then CIPS panel unit root test, Panel cointegration, and Pooled Mean Group estimates approaches were used. Empirical results confirmed the Long-run relationship between energy consumption and trade openness. This study confirms the influence of trade on energy consumption and that they are positively related. International trade increases the energy demand and economic activities. However, high energy demand causes high energy price which negatively impacts on energy consumption and hence reduces the energy consumption. Therefore, there are many implications for the energy conservation and trade policy makers to consider in all four countries.

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