Energy Efficiency and Structural Change Developments across Newly Industrialized Economies: A Sectoral Decomposition Analysis

Abstract

Variation in energy consumption patterns is prominently coupled with efficiency change in newly industrialized countries. The current study estimates the shift in energy consumption in Newly Industrialized countries considering three main economic sectors through the Logarithmic Mean Divisia Index (LMDI) during the period 1990–2015 to analyse the changing patterns of energy consumption. The study considers the change in activity, efficiency and structural components as vital factors that cause changes in energy consumption across the countries. Of these components, the activity component is the major cause of escalating the energy consumption in all the countries whereas the Energy efficiency component contributes to reducing energy consumption except in Brazil, but its contribution is far less than the opposite effect of the activity component. However, the structural component increases energy consumption in China while a more or less persistent behaviour in other countries. The next finding of the study is that, in most countries, energy intensity follows the energy efficiency pattern. The main contributing factor in reducing energy consumption is the improvement in energy efficiency. There is considerable scope to reduce energy consumption through the structural transformation in these economies.