Spatial spillovers and world energy intensity convergence

Abstract

This paper studies the influence of spatial spillovers on energy intensity growth and convergence across 153 countries from 1999 to 2018. The inclusion of spatially lagged variables allows the study of the influence of trade, technological diffusion and policy mimicry on these two processes. Contrary to previous literature, we consider different spatial specifications and weight matrices to test whether spatial spillovers are exogenous or endogenous, as well as their range of influence. Our study finds the spatial lag of X model (SLX), with local spatial weight matrices, fits better to the data. Convergence is found for the world as a whole, conditional to the spatial distribution of countries and several long-term economic characteristics. In this sense, clusters of nearby countries present higher rates of convergence. Besides, domestic capital accumulation, total factor productivity growth and renewable energy consumption significantly determine the characteristics of clubs of convergence. Furthermore, spatial spillovers associated to capital accumulation, population growth and renewable energy consumption also contribute to the definition of these clubs.