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

Abstract

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.