Urbanization, energy use and spatial spillovers: The case of Sub-Saharan Africa

Abstract

In this study, the long- and short-run asymmetric relationships between urbanization and energy consumption in Sub-Saharan Africa (SSA) are examined. Point estimates from a non-linear autoregressive distributed lag (NARDL) model indicate that an increase in urbanization leads to an increase in energy use while a decrease in urban growth is accompanied by lower energy use of a lesser magnitude. Country level analyses show that causality between urbanization and electricity access occurs in spatial clusters. Results from a spatial Durbin (SDM) model show that an increase in a country’s urban population increases its own energy consumption. Indirect effects estimates reveal that an increase in neighboring country j’s foreign direct investment causes country i’s energy use to rise. Findings also show that spatial spillovers are mainly driven by growth in urbanization. Results suggest that macroeconomic policies implemented at the country level impact neighboring countries.