Modeling the Impact of Political Institutions on Energy Security: Evidence from High-Income Countries

Abstract

Energy security has always been the most crucial objective for nations seeking sustainable economic growth. The present study examined the impact of political institutions on energy security using panel data from 34 high-income countries for the years 2000–2018. To investigate the mechanisms through which political variables affect energy security, the study took into account the roles of economic growth, trade, financial development, and urbanization. For the empirical estimation of the research’s objective, Panel robust Driscoll-Kraay standard error technique and Dumitrescu and Hurlin causality test are used. Empirical findings demonstrated the positive effects of trade, economic growth, and financial development on energy security. Particularly, political institutions have a positive impact on energy security in the sample nations. However, the findings showed urbanization has a negative influence on energy security. Additionally, there is a two-way causal link between trade, financial development, and energy security. The study suggested that more green investment in the energy sector for sustainable development might be a result of strong political institutions.