Spatial interaction effect in renewable energy consumption in sub-Saharan Africa
2022
Jeetoo, Jamiil
An important methodological point that has been over-looked by most of the literature is that renewable energy consumption (REC) is not only correlated in time but also in space. The omission of relevant spatial interaction terms in econometric analysis could be a methodological issue of major importance as it could lead to biased and inefficient estimates. This study accounts for spatial interaction effects to investigate the determinants of REC using a balanced panel of 41 countries in sub-Saharan Africa (SSA) over the period 2002 to 2015. The paper computes the Spatial Moran's I value to explore the spatial agglomeration phenomenon. Then, the Spatial Durbin Model (SDM) is applied to investigate the determinants of REC. The result from the Moran's I value indicates positive spatial correlation between REC and the spatial spill-over effect, representing spatial agglomeration. The decomposition of the SDM Model reveals that the direct effect of Gross Domestic Product per capita is negative while the direct effect of quality of governance level is positive.
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