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Economic Development and End-Use Energy Demand

Abstract:
We examine the relationship between economic development and energy demand. The paper identifies the development patterns that characterize particular economic sectors, and analyzes the effect of sector-specific energy demand growth rates on the composition of final energy demand. We also examine some of the associated policy implications. Industrial energy demand increases most rapidly at the initial stages of development, but growth slows steadily throughout the industrialization process. Energy demand for transportation rises steadily, and takes the majority share of total energy use at the latter stages of development. Energy demand originating from the residential and commercial sector also increases to surpass industrial demand, but long term growth is not as pronounced as it is in the transport sector. These results have implications for the primary energy demand of an economy as it develops, and thus, for domestic energy security and global geopolitical relationships.

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Energy Specializations: Energy Modeling – Energy Data, Modeling, and Policy Analysis; Energy and the Economy –Economic Growth and Energy Demand; Energy and the Economy – Resource Endowments and Economic Performance

JEL Codes:
E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination
O13 - Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Q34 - Natural Resources and Domestic and International Conflicts

Keywords: Economic development, energy demand, energy policy, energy security, GDP

DOI: 10.5547/ISSN0195-6574-EJ-Vol22-No2-4


Published in Volume22, Number 2 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.