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The convergence of energy intensity in developing countries: a spatial econometric analysis with Indonesia’s provincial panel data

Author

Listed:
  • Rhisa Azaliah

    (National Nuclear Energy Agency of Indonesia)

  • Hengky Kurniawan

    (Vrije Universiteit Amsterdam
    Universitas Indonesia)

  • Djoni Hartono

    (Universitas Indonesia
    Universitas Indonesia)

  • Putu Angga Widyastaman

    (Universitas Indonesia)

Abstract

Energy intensity convergence can be used to assess the effectiveness of policies in reducing energy intensity. This study analyzes the energy intensity convergence in Indonesia based on panel data of 33 provinces from 2010 to 2018. Spatial econometrics techniques are used in the estimation of beta convergence to measure the spatial dependence of energy intensity. Empirical results show that there is evidence of both absolute and conditional beta convergences with no evidence of sigma convergence. From the results, this study found that other variables, such as provincial income, the role of manufacturing industries, the role of international trade, FDI, and population density, might encourage energy intensity convergence. From the estimation results, several policy recommendations are derived to increase energy efficiency: First, using a more efficient industrial technology. Second, attracting foreign investment to non-industrial sectors. Third, developing exports from sectors that use less energy to increase energy efficiency.

Suggested Citation

  • Rhisa Azaliah & Hengky Kurniawan & Djoni Hartono & Putu Angga Widyastaman, 2024. "The convergence of energy intensity in developing countries: a spatial econometric analysis with Indonesia’s provincial panel data," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(6), pages 14915-14939, June.
    • Handle: RePEc:spr:endesu:v:26:y:2024:i:6:d:10.1007_s10668-023-03227-8
    DOI: 10.1007/s10668-023-03227-8
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    More about this item

    Keywords

    Energy intensity; Absolute and conditional convergence; Spatial regression; Convergence; Indonesia;
    All these keywords.

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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