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The International Energy Security Risk Index in Sustainable Energy and Economy Transition Decision Making—A Reliability Analysis

Author

Listed:
  • Iztok Podbregar

    (Department of Organization and Management, Faculty of Organizational Sciences, University of Maribor, Kidričeva cesta 55a, Kranj 4000 Slovenia)

  • Goran Šimić

    (Department for Simulations and Distance Learning, University of Defense in Belgrade, Pavla Jurišića Šturma 1, Belgrade 11000, Serbia)

  • Mirjana Radovanović

    (Department of Energy Security, Faculty of Security Studies, Educons University, 87 Vojvode Putnika Street, Sremska Kamenica 21208, Serbia)

  • Sanja Filipović

    (Department of Economic Theory and Analysis, Faculty of Business, Singidunum University, Danijelova 32, Belgrade 11000, Serbia)

  • Damjan Maletič

    (Department of Enterprise Engineering, Faculty of Organizational Sciences, University of Maribor, Kidričeva cesta 55a, Kranj 4000, Slovenia)

  • Polona Šprajc

    (Department of Organization and Management, Faculty of Organizational Sciences, University of Maribor, Kidričeva cesta 55a, Kranj 4000 Slovenia)

Abstract

The world economy and society are in a complex process of transition characterized by a high degree of uncertainty. Therefore, further development and management of the transition will largely depend on the quality of the decisions made and, accordingly, on the decision-making process itself. The main goal of this study is to analyze the reliability of International Energy Security Risk Index as a tool to support the process of energy and economy transition decision making, as closely related and highly interdependent phenomena. The index is composed of 29 aggregated variables (grouped into eight categories), and the research is conducted on a research sample of 25 countries over a period of 36 years. The reliability assessment is performed by using Multiple Regression Analysis. Multicollinearity test, plus Multicollinearity test with Variance Inflation Factors, is used for methodological verification. The test results indicate a high degree of unreliability of the Index, as is concluded based on the observed errors in its methodological settings. These errors primarily relate to a high degree of multicollinearity in all 29 variables, whereby independent variables lose their independence and thus jeopardize reliability of the total Index. Out of the eight groups of variables, the fuel imports group is the only one that does not show big methodological errors. The paper presents a recommendation for the improvement of the observed Index (review of the role of individual variables found to be particularly methodologically indicative), as well as a recommendation for different distribution of weighting coefficients.

Suggested Citation

  • Iztok Podbregar & Goran Šimić & Mirjana Radovanović & Sanja Filipović & Damjan Maletič & Polona Šprajc, 2020. "The International Energy Security Risk Index in Sustainable Energy and Economy Transition Decision Making—A Reliability Analysis," Energies, MDPI, vol. 13(14), pages 1-16, July.
    • Handle: RePEc:gam:jeners:v:13:y:2020:i:14:p:3691-:d:386212
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    References listed on IDEAS

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