Determinants of Energy Productivity: A Comparison of 39 Countries

This paper uses three types of analysis to investigate the drivers of energy productivity changes occurring in 39 countries during 1995-2009. We find that increases in sectoral energy productivity were the primary driver behind economy-wide energy productivity improvements between 1995 and 2009. Structural economic shifts away from industry and towards more service-oriented sectors played a lesser role in aggregate energy productivity improvements. Nations with similar demographic and economic characteristics showed similar levels of energy productivity and rates of improvement. Most notably, former communist countries and nations undergoing economic liberalization exhibited the highest rate of improvement — although they are still characterized as less energy productive than developed nations. Moreover, the econometric analysis reinforces the long-standing hypothesis that higher levels of income per capita and higher energy prices are associated with greater energy productivity, while a greater share of output from industry is associated with lower energy productivity levels. In particular, higher energy prices and income levels are associated with improvements in sectoral energy productivity.