IDEAS home Printed from https://ideas.repec.org/a/eee/wdevel/v124y2019ic1.html
   My bibliography  Save this article

The relationship between energy intensity and economic growth: New evidence from a multi-country multi-sectorial dataset

Author

Listed:
  • Deichmann, Uwe
  • Reuter, Anna
  • Vollmer, Sebastian
  • Zhang, Fan

Abstract

This paper revisits the relationship between energy intensity and economic growth, using a flexible piecewise linear regression model. Based on a panel data set of 137 economies during 1990–2014, the analysis identifies a threshold effect of income growth on energy intensity change: although energy intensity is negatively correlated with income growth throughout the entire sample and study period, the declining rate significantly slows by about 25 percent after the level of per capita income reaches $5,000. Based on index decomposition, the analysis also finds that although structural change is important for intensity levels in all countries, the efficiency effect is more important in higher-income countries. The results suggest that one can expect to see relatively rapid reduction in energy intensity as the economies in today’s poor countries grow. However, when countries move beyond lower-middle-income levels, energy efficiency policies become far more critical for sustaining the rate of reduction in energy intensity.

Suggested Citation

  • Deichmann, Uwe & Reuter, Anna & Vollmer, Sebastian & Zhang, Fan, 2019. "The relationship between energy intensity and economic growth: New evidence from a multi-country multi-sectorial dataset," World Development, Elsevier, vol. 124(C), pages 1-1.
    • Handle: RePEc:eee:wdevel:v:124:y:2019:i:c:1
    DOI: 10.1016/j.worlddev.2019.104664
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305750X19303122
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.worlddev.2019.104664?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kenneth Gillingham & Karen Palmer, 2014. "Bridging the Energy Efficiency Gap: Policy Insights from Economic Theory and Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(1), pages 18-38, January.
    2. Le Pen, Yannick & Sévi, Benoît, 2010. "On the non-convergence of energy intensities: Evidence from a pair-wise econometric approach," Ecological Economics, Elsevier, vol. 69(3), pages 641-650, January.
    3. Susmita Dasgupta & Benoit Laplante & Hua Wang & David Wheeler, 2002. "Confronting the Environmental Kuznets Curve," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 147-168, Winter.
    4. Corinne Le Quéré & Jan Ivar Korsbakken & Charlie Wilson & Jale Tosun & Robbie Andrew & Robert J. Andres & Josep G. Canadell & Andrew Jordan & Glen P. Peters & Detlef P. van Vuuren, 2019. "Drivers of declining CO2 emissions in 18 developed economies," Nature Climate Change, Nature, vol. 9(3), pages 213-217, March.
    5. Richard T. Carson, 2010. "The Environmental Kuznets Curve: Seeking Empirical Regularity and Theoretical Structure," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(1), pages 3-23, Winter.
    6. Zsuzsanna Csereklyei, M. d. Mar Rubio-Varas, and David I. Stern, 2016. "Energy and Economic Growth: The Stylized Facts," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    7. Ang, B.W., 2006. "Monitoring changes in economy-wide energy efficiency: From energy-GDP ratio to composite efficiency index," Energy Policy, Elsevier, vol. 34(5), pages 574-582, March.
    8. Uwe Deichmann & Fan Zhang, 2013. "Growing Green : The Economic Benefits of Climate Action," World Bank Publications - Books, The World Bank Group, number 13194, December.
    9. Mulder, Peter & de Groot, Henri L.F., 2012. "Structural change and convergence of energy intensity across OECD countries, 1970–2005," Energy Economics, Elsevier, vol. 34(6), pages 1910-1921.
    10. Ezcurra, Roberto, 2007. "Distribution dynamics of energy intensities: A cross-country analysis," Energy Policy, Elsevier, vol. 35(10), pages 5254-5259, October.
    11. Tang, Xu & Snowden, Simon & Höök, Mikael, 2013. "Analysis of energy embodied in the international trade of UK," Energy Policy, Elsevier, vol. 57(C), pages 418-428.
    12. Luzzati, T. & Orsini, M., 2009. "Investigating the energy-environmental Kuznets curve," Energy, Elsevier, vol. 34(3), pages 291-300.
    13. Arthur A. van Benthem, 2015. "Energy Leapfrogging," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(1), pages 93-132.
    14. Ang, B. W., 2004. "Decomposition analysis for policymaking in energy:: which is the preferred method?," Energy Policy, Elsevier, vol. 32(9), pages 1131-1139, June.
    15. Arthur van Benthem & Mattia Romani, 2009. "Fuelling Growth: What Drives Energy Demand in Developing Countries?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 91-114.
    16. Stern, David I., 2012. "Modeling international trends in energy efficiency," Energy Economics, Elsevier, vol. 34(6), pages 2200-2208.
    17. Wang, Chunhua, 2013. "Changing energy intensity of economies in the world and its decomposition," Energy Economics, Elsevier, vol. 40(C), pages 637-644.
    18. Stern, David I., 2004. "The Rise and Fall of the Environmental Kuznets Curve," World Development, Elsevier, vol. 32(8), pages 1419-1439, August.
    19. repec:dau:papers:123456789/6801 is not listed on IDEAS
    20. Burke, Paul J. & Csereklyei, Zsuzsanna, 2016. "Understanding the energy-GDP elasticity: A sectoral approach," Energy Economics, Elsevier, vol. 58(C), pages 199-210.
    21. Bin Su & B. W. Ang, 2012. "Structural Decomposition Analysis Applied To Energy And Emissions: Aggregation Issues," Economic Systems Research, Taylor & Francis Journals, vol. 24(3), pages 299-317, March.
    22. Mielnik, Otavio & Goldemberg, Jose, 2000. "Converging to a common pattern of energy use in developing and industrialized countries," Energy Policy, Elsevier, vol. 28(8), pages 503-508, July.
    23. Liu, Hongtao & Xi, Youmin & Guo, Ju'e & Li, Xia, 2010. "Energy embodied in the international trade of China: An energy input-output analysis," Energy Policy, Elsevier, vol. 38(8), pages 3957-3964, August.
    24. Gale A. Boyd and Joseph M. Roop, 2004. "A Note on the Fisher Ideal Index Decomposition for Structural Change in Energy Intensity," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 87-102.
    25. David I. Stern and Astrid Kander, 2012. "The Role of Energy in the Industrial Revolution and Modern Economic Growth," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    26. Mikko Myrskylä & Hans-Peter Kohler & Francesco C. Billari, 2009. "Advances in development reverse fertility declines," Nature, Nature, vol. 460(7256), pages 741-743, August.
    27. Su, Bin & Ang, B.W., 2012. "Structural decomposition analysis applied to energy and emissions: Some methodological developments," Energy Economics, Elsevier, vol. 34(1), pages 177-188.
    28. Ang, B.W. & Zhang, F.Q., 2000. "A survey of index decomposition analysis in energy and environmental studies," Energy, Elsevier, vol. 25(12), pages 1149-1176.
    29. Kenneth B. Medlock III & Ronald Soligo, 2001. "Economic Development and End-Use Energy Demand," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 77-105.
    30. Dinda, Soumyananda, 2004. "Environmental Kuznets Curve Hypothesis: A Survey," Ecological Economics, Elsevier, vol. 49(4), pages 431-455, August.
    31. Markandya, Anil & Pedroso-Galinato, Suzette & Streimikiene, Dalia, 2006. "Energy intensity in transition economies: Is there convergence towards the EU average?," Energy Economics, Elsevier, vol. 28(1), pages 121-145, January.
    32. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1127-1170.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhang, Hongyan & Chen, Suisui & Wang, Shuhong, 2022. "Impact of economic growth and labor productivity dispersion on energy intensity in China," Energy, Elsevier, vol. 242(C).
    2. Hong, Junjie & Shi, Fangyuan & Zheng, Yuhan, 2023. "Does network infrastructure construction reduce energy intensity? Based on the “Broadband China” strategy," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    3. Zhao, Jun & Dong, Xiucheng & Dong, Kangyin, 2021. "How does producer services’ agglomeration promote carbon reduction?: The case of China," Economic Modelling, Elsevier, vol. 104(C).
    4. Jacint Balaguer & Ana Cuadros & Jose García-Quevedo, 2023. "Does foreign ownership promote environmental protection? Evidence from firm-level data," Small Business Economics, Springer, vol. 60(1), pages 227-244, January.
    5. Xu, Mengmeng & Tan, Ruipeng, 2021. "Removing energy allocation distortion to increase economic output and energy efficiency in China," Energy Policy, Elsevier, vol. 150(C).
    6. Chen, Feng-Wen & Tan, Yulu & Chen, Fengzhang & Wu, Yong-Qiu, 2021. "Enhancing or suppressing: The effect of labor costs on energy intensity in emerging economies," Energy, Elsevier, vol. 214(C).
    7. Wang, Jie & Zhang, Yuzhen & Zhang, Xiaoling & Song, Mengqiao & Ye, Jianping, 2023. "The spatio-temporal trends of urban green space and its interactions with urban growth: Evidence from the Yangtze River Delta region, China," Land Use Policy, Elsevier, vol. 128(C).
    8. Houjian Li & Xiaolei Zhou & Mengqian Tang & Lili Guo, 2022. "Impact of Population Aging and Renewable Energy Consumption on Agricultural Green Total Factor Productivity in Rural China: Evidence from Panel VAR Approach," Agriculture, MDPI, vol. 12(5), pages 1-19, May.
    9. Yuanying Chi & Guoqing Bai & Jialin Li & Bin Chen, 2021. "Research on the coordination of energy in China’s economic growth," PLOS ONE, Public Library of Science, vol. 16(6), pages 1-20, June.
    10. Santiago, Renato & Fuinhas, José Alberto & Marques, António Cardoso, 2020. "An analysis of the energy intensity of Latin American and Caribbean countries: Empirical evidence on the role of public and private capital stock," Energy, Elsevier, vol. 211(C).
    11. Yin, Zi Hui & Zeng, Wei Ping, 2023. "The effects of industrial intelligence on China's energy intensity: The role of technology absorptive capacity," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    12. Huang, Liqing & Zhu, Bangzhu & Wang, Ping & Chevallier, Julien, 2022. "Energy out-of-poverty and inclusive growth: Evidence from the China health and nutrition survey," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 344-352.
    13. Chen, Yu & Lin, Boqiang, 2021. "How does infrastructure affect energy services?," Energy, Elsevier, vol. 231(C).
    14. Azad Haider & Wimal Rankaduwa & Farzana Shaheen & Sunila Jabeen, 2023. "The Nexus between GHGs Emissions and Clean Growth: Empirical Evidence from Canadian Provinces," Sustainability, MDPI, vol. 15(3), pages 1-19, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Azad Haider & Wimal Rankaduwa & Farzana Shaheen & Sunila Jabeen, 2023. "The Nexus between GHGs Emissions and Clean Growth: Empirical Evidence from Canadian Provinces," Sustainability, MDPI, vol. 15(3), pages 1-19, January.
    2. Zsuzsanna Csereklyei, M. d. Mar Rubio-Varas, and David I. Stern, 2016. "Energy and Economic Growth: The Stylized Facts," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    3. Löschel, Andreas & Pothen, Frank & Schymura, Michael, 2015. "Peeling the onion: Analyzing aggregate, national and sectoral energy intensity in the European Union," Energy Economics, Elsevier, vol. 52(S1), pages 63-75.
    4. Rajbhandari, Ashish & Zhang, Fan, 2018. "Does energy efficiency promote economic growth? Evidence from a multicountry and multisectoral panel dataset," Energy Economics, Elsevier, vol. 69(C), pages 128-139.
    5. Michael Schymura & Andreas Löschel, 2012. "Trade and the Environment: An Application of the WIOD Database," EcoMod2012 3948, EcoMod.
    6. Agovino, Massimiliano & Bartoletto, Silvana & Garofalo, Antonio, 2019. "Modelling the relationship between energy intensity and GDP for European countries: An historical perspective (1800–2000)," Energy Economics, Elsevier, vol. 82(C), pages 114-134.
    7. Csereklyei, Zsuzsanna & Stern, David I., 2015. "Global energy use: Decoupling or convergence?," Energy Economics, Elsevier, vol. 51(C), pages 633-641.
    8. Balado-Naves, Roberto & Baños-Pino, José Francisco & Mayor, Matías, 2023. "Spatial spillovers and world energy intensity convergence," Energy Economics, Elsevier, vol. 124(C).
    9. Saunders, Harry D. & Roy, Joyashree & Azevedo, Inês M.L. & Chakravarty, Debalina & Dasgupta, Shyamasree & De La Rue Du Can, Stephane & Druckman, Angela & Fouquet, Roger & Grubb, Michael & Lin, Boqiang, 2021. "Energy efficiency: what has research delivered in the last 40 years?," LSE Research Online Documents on Economics 114344, London School of Economics and Political Science, LSE Library.
    10. Shemelis Kebede Hundie & Megersa Debela Daksa, 2019. "Does energy-environmental Kuznets curve hold for Ethiopia? The relationship between energy intensity and economic growth," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-21, December.
    11. Savona, Maria & Ciarli, Tommaso, 2019. "Structural Changes and Sustainability. A Selected Review of the Empirical Evidence," Ecological Economics, Elsevier, vol. 159(C), pages 244-260.
    12. Voigt, Sebastian & De Cian, Enrica & Schymura, Michael & Verdolini, Elena, 2014. "Energy intensity developments in 40 major economies: Structural change or technology improvement?," Energy Economics, Elsevier, vol. 41(C), pages 47-62.
    13. Song, Feng & Zheng, Xinye, 2012. "What drives the change in China's energy intensity: Combining decomposition analysis and econometric analysis at the provincial level," Energy Policy, Elsevier, vol. 51(C), pages 445-453.
    14. Mulder, Peter & de Groot, Henri L.F. & Pfeiffer, Birte, 2014. "Dynamics and determinants of energy intensity in the service sector: A cross-country analysis, 1980–2005," Ecological Economics, Elsevier, vol. 100(C), pages 1-15.
    15. Christian Haas and Karol Kempa, 2018. "Directed Technical Change and Energy Intensity Dynamics: Structural Change vs. Energy Efficiency," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    16. Kempa, Karol & Haas, Christian, 2016. "Directed Technical Change and Energy Intensity Dynamics: Structural Change vs. Energy Efficiency," VfS Annual Conference 2016 (Augsburg): Demographic Change 145722, Verein für Socialpolitik / German Economic Association.
    17. Wang, H. & Ang, B.W. & Su, Bin, 2017. "Assessing drivers of economy-wide energy use and emissions: IDA versus SDA," Energy Policy, Elsevier, vol. 107(C), pages 585-599.
    18. Shahbaz, Muhammad & Sinha, Avik & Kontoleon, Andreas, 2020. "Decomposing Scale and Technique Effects of Economic Growth on Energy Consumption: Fresh Evidence in Developing Economies," MPRA Paper 102111, University Library of Munich, Germany, revised 27 Jul 2020.
    19. Peter Mulder, 2015. "International Specialization, Structural Change and the Evolution of Manufacturing Energy Intensity in OECD Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    20. Zhang, Fan, 2013. "The energy transition of the transition economies: An empirical analysis," Energy Economics, Elsevier, vol. 40(C), pages 679-686.

    More about this item

    Keywords

    Energy intensity; Economic growth; Energy efficiency; Piecewise linear regression; Structural change;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:124:y:2019:i:c:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/worlddev .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.