China's technological spillover effect on the energy efficiency of the BRI countries

Abstract

Given the rising technological progress and infrastructural developments among the Belt and Road Initiative (BRI) countries and the global move towards a reduction in the use of fossil fuels to mitigate climate change, this study aims to examine the role of technological innovation in the countries' energy efficiency to. We discover that energy intensity is increased by endogenous technological innovation in the BRI countries, especially at the middle and higher quantiles. We then remove China from the panel in order to check if the country's high technological advancement and energy efficiency might have an outlying influence on the relationship. Except for a relative decline in the significant estimates across the quantiles, the direction of effect largely remains. Finally, China's technological innovation has a reducing spillover effect on the energy intensity of the BRI countries. These findings indicate that, while endogenous technological innovations are detrimental to the energy efficiency of the BRI countries, China's technologies are energy efficient for the other BRI countries, and should be adopted or absorbed to reduce dependence on fossil fuels.