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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)

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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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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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Related research
Keywords: Energy; Convergence; Transition;

Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  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. [Downloadable!] (restricted)
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  2. Ville Kaitila, 2004. "Convergence of real GDP per capita in the EU15. How do the Accession Countries fit in?," Economics Working Papers 025, European Network of Economic Policy Research Institutes. [Downloadable!]
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Cited by:
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  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. [Downloadable!]
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