Energy security and economic growth: The role of geopolitical tensions

Khandaker Jahangir Alam, Aida Ashtari Nakhaee and Hakan Yilmazkuday

Energy, 2025, vol. 341, issue C

Abstract: This paper investigates the effects of energy security risks on economic growth, with a special focus on the role of geopolitical tensions. Using the local projections method on annual data from 75 countries between 1980 and 2018, we find that energy security risks have a negative and statistically significant impact on economic growth, especially in the short run. During periods of high geopolitical tension, these negative effects are significantly amplified, particularly for emerging markets and developing economies. We also find that the impact of energy security shocks differs based on national energy profiles, with net energy exporters and fossil fuel-dependent nations showing distinct vulnerabilities. An analysis of risk subcategories reveals that price volatility, energy use intensity, and transportation sector risks are key drivers of these negative economic outcomes. Policy suggestions to mitigate these risks follow.

Keywords: Energy security; Economic growth; Geopolitical tensions (search for similar items in EconPapers)
JEL-codes: F51 O47 Q43 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:341:y:2025:i:c:s0360544225049837

DOI: 10.1016/j.energy.2025.139341

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