Energy Security and Growth: Linking Energy Intensity with Capital Efficiency in South Asia

Energy security, energy transition, and economic growth are interconnected components of sustainable development. This chapter empirically analyzes the relationship between energy intensity (EI) and capital efficiency across varying income groups, measured through the incremental capital–output ratio (ICOR). Utilizing a comprehensive dataset covering South Asian lower- and middle-income, and high-income countries (HICs) from 1990 to 2018, this study explores the differential impacts of energy transition policies on economic growth and energy efficiency (EE). The analysis reveals significant disparities in how ICOR affects EI, with higher technical inefficiencies observed in lower-income nations, resulting in greater EI. In contrast, HICs demonstrate a more efficient use of capital, leading to lower EI. These findings underscore the importance of optimizing capital utilization in developing economies to facilitate energy transitions, reduce energy inefficiencies, and enhance economic resilience. The study offers targeted policy recommendations to promote energy security through improved EE, accelerated technological adoption, and strategic energy transitions, ultimately contributing to sustainable economic growth and development. These insights are particularly relevant for policymakers in developing nations, where balancing economic growth and EE remains critical for achieving long-term sustainability goals.