The impact of export composition on environment and energy demand: evidence from newly industrialized countries

Since the exports' nature and the productive capabilities of economies and regions play an essential role in driving the energy demand and carbon dioxide (CO₂) emissions, the modern literature focuses on the importance of export composition in determining the environmental quality. For this purpose, this study aims to test the composition impact of the trade by using export product diversification, extensive margin, and intensive margin on energy use and environment in a case study for the ten newly industrialized countries (NICs) from 1970 to 2014. Additionally, this study employs some other indicators such as income, urbanization, and economic complexity during our investigations. The obtained results from different panel estimations demonstrate that not only the composition of export products but also the income, urbanization, and economic complexity promote energy use and CO₂ emissions. The panel causality results revealed a bidirectional linkage between overall diversification and CO₂ emissions, and the intensive margin and CO₂ emissions. In contrast, a unidirectional causality ran from CO₂ emissions to the extensive margin. Energy consumption presented a bidirectional causality with the overall diversification, intensive margin, economic complexity, and urbanization. Finally, a unidirectional causality is observed from energy consumption to the extensive margin. Based on findings, applicable policies are discussed.