Towards sustainable development in developing countries: Aggregate and disaggregate analysis of energy intensity and the role of fossil fuel subsidies
2020
Solarin, Sakiru Adebola
The aim of this study is to examine the factors affecting energy intensity and its components such as electricity intensity, oil intensity, gas intensity and coal intensity. We pay special attention to the roles of the fossil fuel subsidies, which include total fossil fuel, fossil-fuelled electricity, oil, gas and coal subsidies in developing countries. Using a generalized method of moments approach, it is shown that increase in fossil fuel, electricity, oil, gas and coal subsidies promote energy intensity or its component elements. The results further suggest that urbanization, industrialization and foreign direct investment also promote energy intensity. Conversely, it is also noted that real gross domestic product per capita and human capital development have negative impact on energy intensity and its components. Moreover, the countries are clustered according to their income level and the relationship in the variables are re-examined in each of the clusters. The results are not substantially different to those obtained for the total sample. The implications of these empirical findings are analysed in the paper.
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