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Urbanization and Energy Use In Economic Development

Donald W. Jones

Year: 1989
Volume: Volume 10
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol10-No4-3
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Urbanization and industrialization are the most prom inentfeatures of economic development. The energy use changes brought by industrialization are well known, but urbanization also imposes major, if subtle, changes in energy use. Urbanization shifts production activities formerly undertaken in the home with little or no energy to outside producers who do use energy. One of the largest changes is the daily travel of urban residents, primarily but not exclusively, to work Personal transportation in rural areas generally entails little or no fuel use, while urban transportation does, particularly as incomes increase. Higher density living also induces substitutions of modern for traditional energy forms. Finally, food must be transported longer distances to urban consumers than to rural, agricultural consumers.

The Energy, Economic Growth, Urbanization Nexus Across Development: Evidence from Heterogeneous Panel Estimates Robust to Cross-Sectional Dependence

Brantley Liddle

Year: 2013
Volume: Volume 34
Number: Number 2
DOI: 10.5547/01956574.34.2.8
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This paper combines two aggregate production function models--one with urbanization as a shift factor and one that includes energy/electricity consumption and physical capital--to estimate the macro-level relationship among urbanization, energy/electricity consumption, and economic growth using a panel method that is robust to both cointegration and cross-sectional dependence. For four panels (comprising in turn high, upper middle, lower middle, and low income countries) GDP per capita, total final energy and electricity consumption per capita, gross fixed capital formation per capita, and urbanization were found to be I(1), cross-sectionally dependent, and cointegrated. The long-run elasticity estimates suggest (i) that urbanization is important to and associated with economic growth, (ii) that urbanization's impact on economic growth ranges from substantially negative to nearly neutral to positive as countries develop--an "urbanization ladder" effect, and (iii) that less developed countries are over-urbanized (their elasticities being negative).

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