The Relationship Between Energy Dependency, Energy Diversification, and Economic Growth: Assessing Energy Resilience in Europe

Several successive crises during the first three decades of the third millennium created the premises for a world that, after expanding international relations, entered a new reality of slowbalization or deglobalization, shaping new development paradigms for national economies. In this context, where economic activity remains highly sensitive to energy market disruptions and strategic resource constraints, nations seek new opportunities to reduce their foreign dependencies through energy diversification and a green transition. Nations are seeking strategies to leverage their advantages and moderate their weaknesses. This research evaluates the relationship between energy-related features and economic growth in a complex context, describing dependency on foreign markets. Furthermore, the study discusses the effects of a selection of variables describing the green transition (energy import dependency, energy diversification, and the share of renewable energy) on economic growth. The data covers the period between 1995 and 2024 for 25 European countries. The study uses cross-sectionally ARD (CS-ARDL) for the main empirical analysis and augmented mean group (AMG) to check the robustness of the main results. Furthermore, the method of moments quantile regression (MMQR) is employed to capture the impact more precisely across various stages of countries’ development. The findings suggest a direct relationship between employment and renewable energy adoption across all quantiles. Moreover, the negative coefficient for the energy dependency in the first quantile documents an increased sensitivity of less developed economies to energy market uncertainties.