IDEAS home Printed from https://ideas.repec.org/a/azm/journl/v4y2025i1p1-20.html
   My bibliography  Save this article

Socio-Economic Determinants of Energy Intensity: Comparative Evidence from Developed and Developing Countries

Author

Listed:
  • Hafsa Jabeen

    (International Islamic University, Islamabad)

  • Ayesha Naz

    (International Islamic University, Islamabad)

  • Abdul Rashid

    (International Islamic University, Islamabad)

Abstract

The study objective is to examine the determinants of energy intensity across developed and developing countries from 1990 to 2023. For this purpose, the study employs the system Generalized Method of Moments (GMM). Among the socioeconomic determinants of energy intensity, GDP, FDI, and education reduce energy intensity in developed and developing countries. The education variable appeared to be most influential in reducing energy intensity, particularly in developed countries, followed by FDI and GDP growth. These variables reduce energy intensity, which is driven by the shift towards less energy-intensive sectors and enhancement in energy efficiency. The factors that increase energy intensity include population growth, urbanization, financial development, and currency exchange rate. The strongest driver of energy intensity is urbanization, observed in the panel of developed countries. Energy intensity increases due to more demand for goods and services induced by higher population and urbanization, besides the improvement of the financial sector which facilitates purchases of energy-intensive goods. Therefore, it is desirable to implement energy-efficient policies to achieve the economic growth target with energy sustainability. However, the variables of access to electricity, trade openness, and capital-to-labor diverge in their impact across the panel of developed and developing countries. Understanding the determinants of energy intensity is crucial because it directly influences how effectively economies utilize energy resources. By identifying and addressing the socio-economic factors that drive energy intensity, policymakers can design targeted strategies to optimize energy use, reduce environmental impacts, and align with global energy sustainability goals. This knowledge is vital for balancing economic growth with environmental preservation, ensuring a sustainable energy future.

Suggested Citation

  • Hafsa Jabeen & Ayesha Naz & Abdul Rashid, 2025. "Socio-Economic Determinants of Energy Intensity: Comparative Evidence from Developed and Developing Countries," Journal of Economic Sciences, Federal Urdu University Islamabad, Department of Economics, vol. 4(1), pages 1-20, June.
    • Handle: RePEc:azm:journl:v:4:y:2025:i:1:p:1-20
    DOI: 10.55603/jes.v4i1.a1
    as

    Download full text from publisher

    File URL: https://jesciences.com/index.php/jes/article/view/99
    Download Restriction: no
    File URL: https://libkey.io/10.55603/jes.v4i1.a1?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
    ---><---

    References listed on IDEAS

    as
    1. Sbia, Rashid & Shahbaz, Muhammad & Hamdi, Helmi, 2014. "A contribution of foreign direct investment, clean energy, trade openness, carbon emissions and economic growth to energy demand in UAE," Economic Modelling, Elsevier, vol. 36(C), pages 191-197.
    2. Zhu, Junpeng & Lin, Boqiang, 2020. "Convergence analysis of city-level energy intensity in China," Energy Policy, Elsevier, vol. 139(C).
    3. Cornillie, Jan & Fankhauser, Samuel, 2004. "The energy intensity of transition countries," Energy Economics, Elsevier, vol. 26(3), pages 283-295, May.
    4. 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.
    5. Lin, Boqiang & Xu, Mengmeng, 2019. "Quantitative assessment of factors affecting energy intensity from sector, region and time perspectives using decomposition method: A case of China’s metallurgical industry," Energy, Elsevier, vol. 189(C).
    6. repec:dau:papers:123456789/10972 is not listed on IDEAS
    7. Inglesi-Lotz, R. & Pouris, A., 2012. "Energy efficiency in South Africa: A decomposition exercise," Energy, Elsevier, vol. 42(1), pages 113-120.
    8. Patiño, Lourdes Isabel & Alcántara, Vicent & Padilla, Emilio, 2021. "Driving forces of CO2 emissions and energy intensity in Colombia," Energy Policy, Elsevier, vol. 151(C).
    9. Malik, Afia, 2019. "Dynamics and Determinants of Energy Intensity: Evidence from Pakistan," MPRA Paper 103456, University Library of Munich, Germany.
    10. Birol, Fatih & Keppler, Jan Horst, 2000. "Prices, technology development and the rebound effect," Energy Policy, Elsevier, vol. 28(6-7), pages 457-469, June.
    11. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    12. Sakib Bin Amin & Farhad Taghizadeh-Hesary & Foqoruddin Al Kabir & Farhan Khan, 2023. "Nexus between energy intensity and capital-output ratio: A holistic approach," Energy & Environment, , vol. 34(7), pages 2721-2739, November.
    13. Adom, Philip Kofi, 2015. "Asymmetric impacts of the determinants of energy intensity in Nigeria," Energy Economics, Elsevier, vol. 49(C), pages 570-580.
    14. Sadorsky, Perry, 2010. "The impact of financial development on energy consumption in emerging economies," Energy Policy, Elsevier, vol. 38(5), pages 2528-2535, May.
    15. Jimenez, Raul & Mercado, Jorge, 2014. "Energy intensity: A decomposition and counterfactual exercise for Latin American countries," Energy Economics, Elsevier, vol. 42(C), pages 161-171.
    16. Samargandi, Nahla, 2019. "Energy intensity and its determinants in OPEC countries," Energy, Elsevier, vol. 186(C).
    17. Xu, Bin & Lin, Boqiang, 2015. "How industrialization and urbanization process impacts on CO2 emissions in China: Evidence from nonparametric additive regression models," Energy Economics, Elsevier, vol. 48(C), pages 188-202.
    18. Mekonnen, Alemu & Köhlin, Gunnar, 2008. "Determinants of Household Fuel Choice in Major Cities in Ethiopia," RFF Working Paper Series dp-08-18-efd, Resources for the Future.
    19. Michaël Aklin, 2016. "Re-exploring the Trade and Environment Nexus Through the Diffusion of Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(4), pages 663-682, August.
    20. Richard F. Garbaccio & Mun S. Ho & Dale W. Jorgenson, 1999. "Why Has the Energy-Output Ratio Fallen in China?," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 63-91.
    21. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    22. Jiang Qingquan & Shoukat Iqbal Khattak & Manzoor Ahmad & Lin Ping, 2020. "A new approach to environmental sustainability: Assessing the impact of monetary policy on CO2 emissions in Asian economies," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(5), pages 1331-1346, September.
    23. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    24. Cole, Matthew A., 2006. "Does trade liberalization increase national energy use?," Economics Letters, Elsevier, vol. 92(1), pages 108-112, July.
    25. Hang, Leiming & Tu, Meizeng, 2007. "The impacts of energy prices on energy intensity: Evidence from China," Energy Policy, Elsevier, vol. 35(5), pages 2978-2988, May.
    26. Tiago Sequeira & Marcelo Santos, 2018. "Education and Energy Intensity: Simple Economic Modelling and Preliminary Empirical Results," Sustainability, MDPI, vol. 10(8), pages 1-17, July.
    27. Jiang, Lei & Folmer, Henk & Ji, Minhe, 2014. "The drivers of energy intensity in China: A spatial panel data approach," China Economic Review, Elsevier, vol. 31(C), pages 351-360.
    28. Poumanyvong, Phetkeo & Kaneko, Shinji, 2010. "Does urbanization lead to less energy use and lower CO2 emissions? A cross-country analysis," Ecological Economics, Elsevier, vol. 70(2), pages 434-444, December.
    29. Sadorsky, Perry, 2011. "Trade and energy consumption in the Middle East," Energy Economics, Elsevier, vol. 33(5), pages 739-749, September.
    30. Elliott, Robert J.R. & Sun, Puyang & Chen, Siyang, 2013. "Energy intensity and foreign direct investment: A Chinese city-level study," Energy Economics, Elsevier, vol. 40(C), pages 484-494.
    31. Pan, Xiongfeng & Uddin, Md. Kamal & Saima, Umme & Jiao, Zhiming & Han, Cuicui, 2019. "How do industrialization and trade openness influence energy intensity? Evidence from a path model in case of Bangladesh," Energy Policy, Elsevier, vol. 133(C).
    32. Sadorsky, Perry, 2013. "Do urbanization and industrialization affect energy intensity in developing countries?," Energy Economics, Elsevier, vol. 37(C), pages 52-59.
    Full references (including those not matched with items on IDEAS)

    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. Nusrat Yaqoob & Zakir Hussain Dahri, 2025. "Assessing Water Use Efficiency of Cotton Crop in Pakistan: Impact of Geo-climatic and Socio-economic Factors," Journal of Economic Sciences, Federal Urdu University Islamabad, Department of Economics, vol. 4(1), pages 21-36, June.
    2. Adom, Philip Kofi, 2015. "Business cycle and economic-wide energy intensity: The implications for energy conservation policy in Algeria," Energy, Elsevier, vol. 88(C), pages 334-350.
    3. Amuakwa-Mensah, Franklin & Klege, Rebecca A. & Adom, Philip K. & Amoah, Anthony & Hagan, Edmond, 2018. "Unveiling the energy saving role of banking performance in Sub-Sahara Africa," Energy Economics, Elsevier, vol. 74(C), pages 828-842.
    4. Adom, Philip Kofi & Adams, Samuel, 2018. "Energy savings in Nigeria. Is there a way of escape from energy inefficiency?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 2421-2430.
    5. Adom, Philip Kofi, 2015. "Determinants of energy intensity in South Africa: Testing for structural effects in parameters," Energy, Elsevier, vol. 89(C), pages 334-346.
    6. Adom, Philip Kofi, 2015. "Asymmetric impacts of the determinants of energy intensity in Nigeria," Energy Economics, Elsevier, vol. 49(C), pages 570-580.
    7. Huang, Junbing & Hao, Yu & Lei, Hongyan, 2018. "Indigenous versus foreign innovation and energy intensity in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 1721-1729.
    8. Qamruzzaman, Md & Jianguo, Wei, 2020. "The asymmetric relationship between financial development, trade openness, foreign capital flows, and renewable energy consumption: Fresh evidence from panel NARDL investigation," Renewable Energy, Elsevier, vol. 159(C), pages 827-842.
    9. Huang, Junbing & Du, Dan & Tao, Qizhi, 2017. "An analysis of technological factors and energy intensity in China," Energy Policy, Elsevier, vol. 109(C), pages 1-9.
    10. Liangliang Liu & Wenqing Zhang, 2022. "Vertical fiscal imbalance and energy intensity in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 83(2), pages 509-526, October.
    11. Lee, Chien-Chiang & Wang, Chih-Wei & Ho, Shan-Ju & Wu, Ting-Pin, 2025. "Corrigendum to “The impact of natural disaster on energy consumption: International evidence” [Energy Economics Volume 97, May 2021, 105021]," Energy Economics, Elsevier, vol. 149(C).
    12. Islam, Md. Monirul & Irfan, Muhammad & Shahbaz, Muhammad & Vo, Xuan Vinh, 2022. "Renewable and non-renewable energy consumption in Bangladesh: The relative influencing profiles of economic factors, urbanization, physical infrastructure and institutional quality," Renewable Energy, Elsevier, vol. 184(C), pages 1130-1149.
    13. Cong Khai Dinh & Quang Thanh Ngo & Trung Thanh Nguyen, 2021. "Medium- and High-Tech Export and Renewable Energy Consumption: Non-Linear Evidence from the ASEAN Countries," Energies, MDPI, vol. 14(15), pages 1-16, July.
    14. Pan, Xiongfeng & Uddin, Md. Kamal & Saima, Umme & Jiao, Zhiming & Han, Cuicui, 2019. "How do industrialization and trade openness influence energy intensity? Evidence from a path model in case of Bangladesh," Energy Policy, Elsevier, vol. 133(C).
    15. Li, Ke & Lin, Boqiang, 2017. "Economic growth model, structural transformation, and green productivity in China," Applied Energy, Elsevier, vol. 187(C), pages 489-500.
    16. Adom, Philip K. & Kwakwa, Paul Adjei, 2014. "Effects of changing trade structure and technical characteristics of the manufacturing sector on energy intensity in Ghana," Renewable and Sustainable Energy Reviews, Elsevier, vol. 35(C), pages 475-483.
    17. Yan, Huijie, 2015. "Provincial energy intensity in China: The role of urbanization," Energy Policy, Elsevier, vol. 86(C), pages 635-650.
    18. Acheampong, Alex O. & Dzator, Janet & Dzator, Michael & Salim, Ruhul, 2022. "Unveiling the effect of transport infrastructure and technological innovation on economic growth, energy consumption and CO2 emissions," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    19. Zhang, Wenyue & Li, Jianan & Sun, Chuanwang, 2022. "The impact of OFDI reverse technology spillovers on China's energy intensity: Analysis of provincial panel data," Energy Economics, Elsevier, vol. 116(C).
    20. Lin, Boqiang & Zhu, Junpeng, 2021. "Impact of China's new-type urbanization on energy intensity: A city-level analysis," Energy Economics, Elsevier, vol. 99(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

    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:azm:journl:v:4:y:2025:i:1:p:1-20. 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: Dr. Ihtsham Ul Haq (email available below). General contact details of provider: https://www.fuuastisb.edu.pk/ .

    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.