Trends, Investment Behaviour and Policy Design
Edited by Raymond J.G.M. Florax, Henri L.F. de Groot and Peter Mulder
Chapter 3: Energy-Productivity Performance Across 14 OECD Countries: The Role of Energy-Extensive Sectors
3. Energy-productivity performance across 14 OECD countries: the role of energy-extensive sectors Peter Mulder and Henri L.F. de Groot INTRODUCTION 1 Economic development is typically associated with a change in the sectoral composition of economies, with emphasis shifting from agriculture, via industry towards services. In addition, economic development is characterized by increasing trade, enhanced international specialization and technological progress. At the same time, economic development has generally a strong positive relationship with energy consumption. The nature of this relationship is neither linear nor exogenous, but instead depends to a large extent on the same changes in the sectoral composition of economies and patterns of trade, specialization and technological progress that affect economic growth as well. Against this background, we explore the interplay between economic growth and energy use across 14 countries associated with the Organisation for Economic Co-operation and Development (OECD) during the period 1970–97 in this chapter. Data show that within this relatively homogenous group of countries remarkable cross-country differences in energy productivity exist. We examine trends and differences in energy-productivity performance across countries and search for their determinants, with an emphasis on the role of energy-extensive sectors, such as services and light industry, in driving aggregate trends. Specifically, we document several stylized facts and decompose country’s energy-productivity growth rates into a part that is due to intra-sectoral productivity improvements and a part that is due to changes in sectoral composition. Subsequently, we identify the sector-specific fundamentals determining these energy-productivity developments. For our empirical analysis we constructed a...
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