The effects of international energy prices on the world trade

From the beginning of the Industrial Revolution, the importance of energy increased gradually both as input to the industrial production channels and for household use. A large part of mankind's energy sources is provided from fossil fuels such as coal, oil and natural gas. Therefore, the change in the prices of energy resources has created the outcome of change demand for these goods. The countries demanding energy goods are the countries producing non-energy goods intensively. These countries are exporting their non-energy goods to countries exporting energy goods. From this point of view, the effect of energy prices and the prices of non-energy goods on world trade for selected countries were investigated and by including some variables affecting the trade within the framework of relative prices. Studies taken into account the bilateral trade are theoretically analyzed using the gravity model. Theoretical gravity model analysis can be empirically applied with the various panel regression techniques. In this study, three types of panel regression techniques were employed to determine the effects of independent variables on the trade which is the dependent variable. These are stochastic frontier, random-effects and fixed effects filtered estimator techniques. According to the findings, it was estimated that the price increases in the goods in the price index of energy goods will have a negative impact on the export and the terms of trade will be against to the countries in this case. In this context, it may be concluded that the socio-economic policies should be developed not to raise the energy prices. Raising the supply to meet the increasing demand could be major policy. When considering the other variables in the model, world trade volume may be increased by enhancing growth policies, ensuring competitiveness in the market, presenting effective logistics management, providing cultural cooperation, developing business partnership of countries having similar income levels, increasing and/or diversifying the energy supply in summary. Keywords: International Trade, Energy Prices, Fixed Effects Filtered, Gravity Model, Stochastic Frontier Analysis, Random-Effects Estimator.