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Energy Efficiency in Transition Economies: Is There Convergence Towards the EU Average?

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Author Info

  • Anil Markandya

    (The World Bank, Fondazione Eni Enrico Mattei and University of Bath)

  • Suzette Pedroso

    (The World Bank)

  • Dalia Streimikiene

    (Lithuanian Energy Institute)

Abstract

This paper investigates the relationship between energy intensity in the 12 countries of Eastern Europe that can be considered as in transition to a full market economy, and that of the present EU members. The raw data shows some evidence of convergence, and a carefully estimated econometric model of lagged adjustment confirms this. On average, a 1% decrease in the per capita income gap between developed and transition economies leads to a decrease in the energy intensity growth rate of a transition country by 0.7%. There are differences in the rate of convergence across countries, and these depend on two parameters that are allowed to vary across countries: ?, the elasticity of desired energy intensity with respect to the per capita income gap; and µ, the rate at which actual energy intensity adjusts to the desired energy intensity. The countries with the fastest convergence rates given these parameters are the Czech Republic, Bulgaria, Croatia and Turkey. The forecast values for energy intensity and actual energy demand levels of seven transition countries were estimated. Results show that the energy intensities of transition countries except Estonia converge to EU levels significantly. On the other hand, actual energy demand levels between 2000 and 2020 show an increasing demand in all 7 countries despite the reductions in energy intensity. Therefore, it will not be feasible to use as a target a non-increasing level of total energy consumption.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.89.

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Date of creation: May 2004
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Handle: RePEc:fem:femwpa:2004.89

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Keywords: Energy; Convergence; Transition;

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  1. Sala-i-Martin, Xavier X, 1996. "The Classical Approach to Convergence Analysis," Economic Journal, Royal Economic Society, vol. 106(437), pages 1019-36, July.
  2. Kaitila, Ville, 2003. "Convergence of Real GDP per Capita in the EU15 area: How do the Accession Countries Fit in ?," Discussion Papers 865, The Research Institute of the Finnish Economy.
  3. Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x.
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Cited by:
  1. Ageeva Svetlana & Suslov Nikita, 2005. "Energy Consumption and GDP in Market and Transitional Economies," EERC Working Paper Series 05-05e, EERC Research Network, Russia and CIS.

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