Energy Consumption and Economic Performance in a Spatial Context: Spillover Effects Across Borders

Extensive research has delved into the interplay between energy consumption and economic development. Building upon this rich literature, this paper revisits this nexus from a spatial perspective that emphasizes cross-country interdependencies and spatial dynamics. We utilize a dataset of 103 countries spanning 1990–2015, treating this period as a historically coherent benchmark preceding the major shift in the international climate-policy environment associated with the Paris Agreement and the United Nations 2030 Agenda. Our empirical findings reveal a robust and positive relationship between renewable energy consumption, non-renewable energy consumption, and GDP per capita within a country, consistent with findings in the existing literature. Furthermore, employing a unified spatial model, our study uncovers cross-country spillover effects through geographical proximity, energy consumption similarity, and economic linkages. Notably, the results reveal negative spatial spillover associations between energy consumption in neighboring countries and the home country’s GDP per capita. Potential explanations for these negative spillover effects include increased emissions from neighboring countries, which may impose health and economic burdens on the home country, and the possibility that Renewable Energy Technology Innovation (RETI) promotes local green industrial advancement while limiting similar progress in neighboring countries.