THE ASYMMETRIC IMPACT OF TRADE OPENNESS ON RENEWABLE ENERGY CONSUMPTION IN SOUTH AFRICA

Abstract

The present study examines the asymmetric impact of trade openness on renewable energy consumption in South Africa. The study used a nonlinear ARDL model and three proxies of trade openness: total trade (imports plus exports), imports, and exports from 1990 to 2020. The positive shocks in total trade and exports are found to be negative and statistically significant in the long run, while the negative shocks are not significant. The negative and positive shocks in imports were found not crucial in the long run. In the short run, the positive shocks in all three proxies of trade openness were found not to be significant. The negative shocks for total trade and imports lead to decreased renewable energy consumption. The negative shocks in exports from the previous period were found to have negative and statistically significant effects on renewable energy consumption in the short run. The findings from the study suggest that renewable energy consumption in South Africa is not mainly influenced by the openness of the economy. Therefore, there is a need to initiate policies promoting renewable energy consumption and moving production activities from being heavily dependent on non-renewable energy.