Energy poverty and economic complexity: effect and transmission channels

Hemachandra Padhan (), Sosson Tadadjeu (), Henri Njangang () and Brice Kamguia ()
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Hemachandra Padhan: Indian Institute of Management (IIM)
Sosson Tadadjeu: University of Dschang
Henri Njangang: University of Dschang
Brice Kamguia: University of Dschang

Economic Change and Restructuring, 2025, vol. 58, issue 6, No 3, 31 pages

Abstract: Abstract This study examines the effect of energy poverty on economic complexity using an unbalanced panel of 116 countries over the period 1996–2019. Beyond estimating the direct effects, the analysis explores the mechanisms through which energy poverty shapes structural economic transformation. To address potential endogeneity and ensure robustness, instrumental variable two-stage least squares (IV-2SLS) and system generalized method of moments (GMM) estimators are employed. The results indicate a significant and positive impact of energy poverty reduction on economic complexity. These findings remain consistent across alternative specifications, robustness checks, and subsample analyses. Mechanism analysis further reveals that improvements in human capital and income levels constitute the primary channels of transmission. The evidence highlights energy access as a critical determinant of economic sophistication, underscoring the need for targeted energy policies to foster inclusive growth and structural transformation.

Keywords: Energy poverty; Economic complexity; Mediation analysis; Panel data (search for similar items in EconPapers)
JEL-codes: B41 B49 C23 I32 J52 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10644-025-09933-9

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