The impact of economic complexity on energy consumption risk

This study analyzes the impact of economic complexity (EC) on energy consumption risk (ECR) for 137 countries between 2000 and 2022. While existing studies generally relate EC to energy consumption or renewable energy, empirical research directly addressing ECR is quite limited. In this context, the MMQR is used to observe the effects across different ECR distribution quantiles and to address heteroskedasticity issues. The robustness of the findings is tested using Instrumental Variable (IV) Quantile Regression and alternative IV estimation methods such as Lewbel-IV, Kiviet-IV, Hausman-Taylor IV, and IV-GMM. The results show that economic complexity significantly and consistently reduces ECR across most quantiles. This finding suggests that increasing economic complexity enhances the resilience of energy systems and mitigates energy risks through technological advancements, innovation, and high-value-added production. From a policy perspective, strategies to improve economic complexity need to be prioritized to achieve energy security and sustainability.