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Corresponding Author:
Osama Sweidan, Department of Economics and Finance, College of Business and Economics, UAE University, Al Ain

Does Crude Oil Production Affect China's Historical Geopolitical Risk?

June 18, 2024
JEL classification: C22; E02; F51; Q43
Keywords: China Economy; Crude Oil Production; Economic Competitiveness; Geopolitical Risk; The ARDL Model

Abstract

Growing empirical research confirmed that geopolitical risk has significantly affected various economic variables. This study focuses on understanding geopolitical risk in-depth and exploring its determinants. It investigates if crude oil production affects China’s historical geopolitical risk. The current study constructs and estimates an empirical model using the bounds testing approach to cointegration in order to compute the ARDL model parameters over the period 1986: q1-2022: q1. It finds that crude oil production and prices are significant sources of China’s historical geopolitical risk. Moreover, a deterioration in the US economic competitiveness and growth rate will boost China’s historical geopolitical risk. From a policy implication standpoint, the race to control and lead the world will be a significant source of adverse shocks to the world economy. The economic variables, either quantitative or price indices, become a significant source of geopolitical risk among nations. Thus, it is necessary to establish a strong connection between nations worldwide. This is to ensure that the rivals reach a compromise.

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Does Crude Oil Production Affect China's Historical Geopolitical Risk?

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Institute for International Economics of the Genoa Chamber of Commerce

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