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Export Growth - Fuel Price Nexus in Developing Countries:Real or False Concern?

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  • Kangni Kpodar
  • Stefania Fabrizio
  • Kodjovi Eklou

Abstract

This paper investigates the impact of domestic fuel price increases on export growth in a sample of 77 developing countries over the period 2000-2014. Using a fixed-effect estimator and the local projection approach, we find that an increase in domestic gasoline or diesel price adversely affects real non-fuel export growth, with the impact phasing out within two years after the shock. The impact is mainly noticeable in countries with a high-energy dependency ratio and where access to electricity is limited. Further, large fuel price shocks do not seem to lead to disproportionately large changes in exports, suggesting that neither the gradualism nor the shock therapy approach in fuel subsidy reforms dominates. In countries where the export sector is vulnerable to fuel price shocks, appropriate mitigating measures should be designed to smooth the transition to higher fuel prices.

Suggested Citation

  • Kangni Kpodar & Stefania Fabrizio & Kodjovi Eklou, 2022. "Export Growth - Fuel Price Nexus in Developing Countries:Real or False Concern?," The Energy Journal, , vol. 43(3), pages 59-82, May.
    • Handle: RePEc:sae:enejou:v:43:y:2022:i:3:p:59-82
    DOI: 10.5547/01956574.43.3.kkpo
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    Cited by:

    1. Ebeke, Christian H. & Eklou, Kodjovi M., 2023. "Automation and the employment elasticity of fiscal policy," Journal of Macroeconomics, Elsevier, vol. 75(C).

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    More about this item

    Keywords

    Retail fuel prices; Fuel subsidies; Export growth; Developing countries;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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