Publication: Does Energy Efficiency Promote Economic Growth?: Evidence from a Multicountry and Multisectoral Panel Dataset
Loading...
Files in English
920 downloads
Published
2018-01
ISSN
0140-9883
Date
2018-02-01
Author(s)
Rajbhandari, Ashish
Editor(s)
Abstract
We examine the causal relationship between energy efficiency and economic growth based on panel data for 56 high- and middle-income economies from 1978 to 2012. Using a panel vector autoregression approach, we find evidence of a long-run Granger causality from economic growth to lower energy intensity for all economies. We also find evidence of long-run bidirectional causality between lower energy intensity and higher economic growth for middle-income economies. This finding suggests that beyond climate benefits, middle-income economies may also earn an extra growth dividend from energy efficiency measures.
Link to Data Set
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Citations
- Cited 122 times in Scopus (view citations)
Collections
Related items
Showing items related by metadata.
Publication Does Energy Efficiency Promote Economic Growth?(World Bank, Washington, DC, 2017-05)This paper examines the causal relationship between energy efficiency and economic growth based on panel data for 56 high- and middle-income countries from 1978 to 2012. Using a panel vector autoregression approach, the study finds evidence of a long-run Granger causality from economic growth to lower energy intensity for all countries. The study also finds evidence of long-run bidirectional causality between lower energy intensity and higher economic growth for middle-income countries. This finding suggests that beyond climate benefits, middle-income countries may also earn an extra growth dividend from energy efficiency measures.Publication Intersectoral Dynamics and Economic Growth in Ecuador(World Bank, Washington, DC, 2001-01)The authors analyze sectoral growth in Ecuador, using multivariate co-integration analysis. They find significant long-run relationships between the agricultural, industrial, and service sectors. Moreover, they are able to derive dynamic sector models that combine the short-run links between the three sectors with long-run dynamics. When disaggregate the three sectors into their intra-sectoral components, they discover many interesting relationships that contribute to a better understanding of inter- and intra-sectoral dynamics in the context of Ecuadorian economic growth. Their findings suggest that more attention should be paid to inter-dependencies in sectoral growth, since an improved understanding of inter-sectoral dynamics may facilitate the implementation of policy aimed at increasing economic growth in Ecuador. There appears to be no direct link between the oil sector, and the non-oil industrial sectors. But strong evidence supports co-integration between the oil industry, and financial services, as well as between the oil industry, and public services. This means, among other things, that the oil industry is likely to affect other sectors through the financial sector, the public sector, or both.Publication Financing Clean Energy(2007-03-13)Paul Wolfowitz, President of the World Bank, discussed how to meet the rising demand for energy while reducing our carbon footprint. Rich countries need to lead by example, renovating and replacing infrastructure and investing in clean technology. Rich countries also need to lead with direct support to developing nations, both to reduce poverty and reduce carbon emissions. Moving to a low carbon path will require investments, and a long-term equitable global regulatory framework to reduce greenhouse gas emissions. The Bank has been actively supporting climate-friendly solutions in four areas: efficiency and conservation, renewable energy, forest preservation, and adaptation to climate change.Publication Energy Efficiency Finance : Assessing the Impact of IFC's China Utility-based Energy Efficiency Finance Program(Washington, DC: World Bank, 2010)This evaluation assesses the performance of International Finance Corporations (IFC's) energy efficiency finance program in China aimed at stimulating energy efficiency investments through bank guarantees and technical assistance. The program's significance is underpinned by the fact that China's size, rapid economic growth, and inefficiencies in energy use make it one of the world's largest emitters of carbon dioxide (CO2.). The utilization of IFC's program has been rapid compared with other similar programs. The difference made by the program is traced along the chain of interventions: (i) at the level of banks, the program is narrowly based on one of the two partner banks, which, with the help of the program, expanded its energy efficiency lending as a new business line; (ii) at the level of energy management companies, the program's technical assistance improved the program participants' access to finance; and (iii) at the end-user level, it promoted the use of energy efficiency investments that achieved reduction of greenhouse gas emissions. The evaluation recommends areas of improvement to realize greater impact. First, the program needs to emphasize areas where the potential additionality is high, such as small enterprises. Second, the program needs to concentrate more on activities that have the potential to reduce emissions significantly, such as energy efficiency for buildings. Third, the program's subsidy elements need to be reoriented to the areas of market failure, with IFC increasing its coverage of first loss from its own resources.Publication Western Balkans : Scaling Up Energy Efficiency in Buildings(Washington, DC, 2014-06)Within the six countries of the Western Balkans, Albania, Bosnia and Herzegovina, Kosovo, the Former Yugoslav Republic of Macedonia, Montenegro, and Serbia, energy efficiency (EE) is increasingly seen as a key pillar in national energy strategies, helping to enhance energy security, contribute to economic growth, and ensure environmental sustainability. This is for several reasons. EE can reduce the region's heavy reliance on expensive imports, enhance competitiveness and job creation, and reduce the impact of widespread fossil fuel use. EE can also bring important social benefits, helping to improve local air quality (mitigating related adverse health impacts), improve indoor comfort levels through improved heating, and make energy more affordable for low-income families. Finally, EE is seen as a critical tool in helping to mitigate the effects of necessary and planned tariff reforms by offsetting the higher energy costs to the entire economy. To realize these benefits, the Western Balkans countries will have to shift from broad policies and small-scale pilots to scaled-up financing and implementation. There is an urgent need to develop viable financing models in all sectors, as well as suitable delivery mechanisms, information systems, and necessary secondary legislation, in order to meet national targets and fuel economic development in a more sustainable manner. Buildings, which account for almost half of energy use in the regions, have been identified as a key sector in all of the country EE plans.
Users also downloaded
Showing related downloaded files
Publication Global Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-10)The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.Publication Digital Progress and Trends Report 2023(Washington, DC: World Bank, 2024-03-05)Digitalization is the transformational opportunity of our time. The digital sector has become a powerhouse of innovation, economic growth, and job creation. Value added in the IT services sector grew at 8 percent annually during 2000–22, nearly twice as fast as the global economy. Employment growth in IT services reached 7 percent annually, six times higher than total employment growth. The diffusion and adoption of digital technologies are just as critical as their invention. Digital uptake has accelerated since the COVID-19 pandemic, with 1.5 billion new internet users added from 2018 to 2022. The share of firms investing in digital solutions around the world has more than doubled from 2020 to 2022. Low-income countries, vulnerable populations, and small firms, however, have been falling behind, while transformative digital innovations such as artificial intelligence (AI) have been accelerating in higher-income countries. Although more than 90 percent of the population in high-income countries was online in 2022, only one in four people in low-income countries used the internet, and the speed of their connection was typically only a small fraction of that in wealthier countries. As businesses in technologically advanced countries integrate generative AI into their products and services, less than half of the businesses in many low- and middle-income countries have an internet connection. The growing digital divide is exacerbating the poverty and productivity gaps between richer and poorer economies. The Digital Progress and Trends Report series will track global digitalization progress and highlight policy trends, debates, and implications for low- and middle-income countries. The series adds to the global efforts to study the progress and trends of digitalization in two main ways: · By compiling, curating, and analyzing data from diverse sources to present a comprehensive picture of digitalization in low- and middle-income countries, including in-depth analyses on understudied topics. · By developing insights on policy opportunities, challenges, and debates and reflecting the perspectives of various stakeholders and the World Bank’s operational experiences. This report, the first in the series, aims to inform evidence-based policy making and motivate action among internal and external audiences and stakeholders. The report will bring global attention to high-performing countries that have valuable experience to share as well as to areas where efforts will need to be redoubled.Publication The Container Port Performance Index 2023(Washington, DC: World Bank, 2024-07-18)The Container Port Performance Index (CPPI) measures the time container ships spend in port, making it an important point of reference for stakeholders in the global economy. These stakeholders include port authorities and operators, national governments, supranational organizations, development agencies, and other public and private players in trade and logistics. The index highlights where vessel time in container ports could be improved. Streamlining these processes would benefit all parties involved, including shipping lines, national governments, and consumers. This fourth edition of the CPPI relies on data from 405 container ports with at least 24 container ship port calls in the calendar year 2023. As in earlier editions of the CPPI, the ranking employs two different methodological approaches: an administrative (technical) approach and a statistical approach (using matrix factorization). Combining these two approaches ensures that the overall ranking of container ports reflects actual port performance as closely as possible while also being statistically robust. The CPPI methodology assesses the sequential steps of a container ship port call. ‘Total port hours’ refers to the total time elapsed from the moment a ship arrives at the port until the vessel leaves the berth after completing its cargo operations. The CPPI uses time as an indicator because time is very important to shipping lines, ports, and the entire logistics chain. However, time, as captured by the CPPI, is not the only way to measure port efficiency, so it does not tell the entire story of a port’s performance. Factors that can influence the time vessels spend in ports can be location-specific and under the port’s control (endogenous) or external and beyond the control of the port (exogenous). The CPPI measures time spent in container ports, strictly based on quantitative data only, which do not reveal the underlying factors or root causes of extended port times. A detailed port-specific diagnostic would be required to assess the contribution of underlying factors to the time a vessel spends in port. A very low ranking or a significant change in ranking may warrant special attention, for which the World Bank generally recommends a detailed diagnostic.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.