The relationship between energy consumption and GDP in countries of the world

The article provides analysis of the influence of energy consumption on GDP in various regions and countries of the world (America, Europe, Post-Soviet space, Middle East, Africa, Asia-Pacific region). It is shown that: 1) there is a direct linear causal relationship between the growth of energy consumption and economic development in the absence of external effects in the field of energy efficiency; 2) external factors that contribute to the efficiency of energy consumption – ​institutional environment and scientific and technological achievements in the field of energy efficiency; change of the structure of the economy in favor of less energy-intensive industries. Models based on linear algebra, such as the Leontief model, can be used to describe the relationship between energy consumption and economic growth. Energy consumption in different sectors of the economy can have both positive and negative relationships with economic growth. A reduction of the share of industry and agriculture does not guarantee a simultaneous decline of energy consumption in the service sector. There is a direct linear relationship between energy consumption in the services sector as well as in the transportation sector and economic development of different countries around the world. Increased energy consumption in the transportation sector which supports economic development is connected with an increase of the well-being of the population in several countries. The inverse relationship shown by some of the study results does not indicate that all countries studied are more energy efficient. This outcome reflects only the presence of external influences that encourage energy efficiency. Energy saving is not a limiting factor for economic growth, but it does not occur in economic system without a set of external incentives in different sectors of economy.

1. Karpov K. A. (2019). Patterns of development of global energy consumption. Problems of Forecasting, no. 1, pp. 55–62 (in Russian).

2. Kornilova A.Yu. (2023). Physical Economics within the context of modern economic problems. Economics of Contemporary Russia, no. 2, pp. 17–31 (in Russian).

3. Kuznetsov P. G. (2015). The science of life development: a collection of works. Vol. III. Proper application of the law. Moscow: Russian Space Society. 560 p. (in Russian).

4. Kustova O. I., Redkina A.Yu., Chadov A. L., Shankman (Popova) E.A. (2021). How does renewable energy affect economic growth? The results of modeling on data of different frequencies. Izvestiya RAS. Energetics, vol. 1, pp. 79–91(in Russian).

5. Reva A. R. (2019). The relationship between energy consumption and GDP. Elasticity of primary energy consumption in India. Economics: Yesterday, Today, Tomorrow, vol. 9, no. 4A, pp. 371–383 (in Russian).

6. Jian Ch., Xin Ch. (2022). Is there a systematic two-way causal relationship between GDP and energy consumption in China? Vestnik TvSU. Series: Economics and Management, no. 1, pp. 134–146 (in Russian).

7. Abosedra S. (1989). New evidence on the causal relationship between United States energy consumption and gross national product. Journal of Energy Development, no. 14, pp. 285–292.

8. Akarca A.L. (1980). On the Relationship between Energy and GNP: A Reexamination. Energy and Development, vol. 5, pp. 326–331.

9. Changes in global coal consumption by region, 2021–2023 (2023). – ​International Energy Agency. URL: https://www.iea.org/data-and-statistics/charts/changes-in-global-coal-consumption-by-region‑2021-2023

10. Chen S.T., Kuo H.I., Chen C.C. (2007). The relationship between GDP and electricity consumption in 10 Asian countries. Energy Policy, vol. 35, pp. 2611–2621

11. Energy Efficiency 2022. (2023) International Energy Agency. URL: https://www.iea.org/reports/energy-efficiency‑2022

12. Energy Statistics Data Browser (2024). International Energy Agency. URL: https://www.iea.org/data-and-statistics/data-tools/energy-statistics-data-browser?country=ROMANIA&fuel=Energy%20consumption&indicator=TFCShareBySector

13. Energy efficiency benefits in Canada: maximizing opportunities for a competitive economy. Report of the Standing Committee on Natural Resources (2023). House of Commons. Canada URL: https://www.ourcommons.ca/Content/Committee/421/RNNR/Reports/RP10567525/rnnrrp12/rnnrrp12-e.pdf

14. Council Directive 92/75/EEC (1992). Council Directive 92/75/EEC of 22 September 1992 on the indication by labelling and standard product information of the consumption of energy and other resources by household appliances. European Union. URL: https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A31992L0075

15. Greenford D.H., Crownshaw T., Lesk C., Stadler K., Matthews H. D. (2020). Shifting economic activity to services has limited potential to reduce global environmental impacts due to the household consumption of labour. Environmental Research Letters, vol. 15, no. 6, pp.1–11.

16. Gozgor G., Lau Ch.K.M., Lu Zh. (2018). Energy consumption and economic growth: New evidence from the OECD countries. Energy, vol. 153(C), pp. 27–34.

17. Hunt L.C., Pierse R. G., Chontanawat J. (2006). Does energy consumption cause economic growth? Evidence from a systematic study of over 100 countries. Journal of Policy Modeling, no. 30 (2), pp. 209–220.

18. Islam F., Shahbaz M., Ahmed A. U., Alam M. (2012). Financial development and energy consumption nexus in Malaysia: A multivariate time series analysis. Economic Modelling, vol. 30, pp. 435–441.

19. Kayani F.N. (2021). Renewable Energy and Economic Growth Nexus: A Case of United Arab Emirates. International Journal of Energy Economics and Policy, no.11 (5), pp. 504–509.

20. LaRouche L.H. (1984). So, You Wish to Learn All About Economics? A Text on Elementary Mathematical Economics. New York: New Benjamin Franklin House. 208 p.

21. Liu W.-Ch. (2020). The Relationship between Primary Energy Consumption and Real Gross Domestic Product: Evidence from Major Asian Countries. Sustainability, vol. 12 (6). URL: https://www.mdpi.com/2071-1050/12/6/2568

22. Ozturk I., Bilgili F. (2015). Economic growth and biomass consumption nexus: Dynamic panel analysis for Sub-Sahara African countries. Applied Energy, vol. 137, pp. 110–116.

23. Peković D. (2023). The effects of energy consumption on economic growth in post-transition countries. Ecologica, no. 30 (109), pp. 76–80.

24. Penn World Table version 10.01 (2024). – ​Groningen Growth and Development Centre. URL: https://www.rug.nl/ggdc/productivity/pwt/?lang=en

25. Polimeni J. (2007). Jevons’ paradox and the economic implications for Europe. International Business & Economics Research Journal, vol. 6, no. 10, pp. 109–120.

26. Sharaf M.F. (2017). Energy consumption and economic growth in Egypt: A disaggregated causality analysis with structural breaks. Région et Développement, vol. 46, pp. 59–76.

27. Statistical Review of World Energy (2023). Energy Institute. URL: https://www.energyinst.org/statistical-review

28. Stern D.I. (2000). A multivariate cointegration analysis of the role of energy in the US macroeconomy. Energy Economics, no. 22, pp. 267–283.

29. Tilton J. (2003). On Borrowed Time. Assessing the Threat of Mineral Depletion. Washington, Resources for the future. 158 p. URL: https://www.iied.org/g01028

30. Tsemekidi Tzeiranak S., Bertoldi P., Paci D., et al. (2020). Energy Consumption and Energy Efficiency trends in the EU‑28, 2000–2018. EUR30328 EN. Luxembourg: Publications Office of the European Union. URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC120681.

31. York R. (2006). Ecological Paradoxes: William Stanley Jevons and the Paperless Office Human. Ecology Review, vol. 13, no. 2, pp. 143–147.

32. Yu E., Hwang B. (1984). The Relationship between Energy and GNP: Further Results. Energy Economics, vol. 6, pp. 186–190.

33. Zaidi S., Gmiden S., Saidi K. (2017). How energy consumption affects economic development in select African countries. Quality & Quantity, no. 52, pp. 501–513.

34. World Development Indicators (2023). World Bank. URL: https://databank.worldbank.org/source/world-development-indicators

35. World Steel Yearbook (1990–2019). Web archive. URL: https://web.archive.org/web/20120701061319/http://worldsteel.org/statistics/statistics-archive/yearbook-archive.html