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Understanding energy use growth: The role of investment-GDP ratio

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  • Liao, Hua
  • Peng, Ying
  • Wang, Fang-Zhi
  • Zhang, Tong

Abstract

The aggregate analysis on the relationship between energy use and GDP growth may cloak important decision information. Among them, economic structure such as investment-GDP ratio is also vital to energy use. Employing a panel dataset of 64 large economies over 1972–2019, this study empirically investigates this issue. It finds that a higher ratio of investment to GDP is significantly associated with an increase in the growth rate of energy use, with an average effect size of 0.08. Two candidate mechanisms jointly contribute to such patterns: the growth of energy-intensive product and the changing ratio of industrial value added to GDP. The results show that economic structure transformation can help alleviate the pressure on energy demand.

Suggested Citation

  • Liao, Hua & Peng, Ying & Wang, Fang-Zhi & Zhang, Tong, 2022. "Understanding energy use growth: The role of investment-GDP ratio," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 15-24.
    • Handle: RePEc:eee:streco:v:63:y:2022:i:c:p:15-24
    DOI: 10.1016/j.strueco.2022.08.007
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    More about this item

    Keywords

    Economic growth; Energy use; Investment-GDP ratio;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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