Energy Productivity And Convergence In The Asia Region

Energy is a well identified to be the fundamental factor of production function in economic activity and it is closely associated with economic development. In the recent years, there has been growing concerns about energy due to the environmental problems, climate change and high energy price. In order to maintain sustainable economic development, there is a strong need to reduce greenhouse gas (GHG) and enhance current security of energy supply. Particularly, in Asia energy use has been increasing at fastest rate due to higher population growth, rapid economic development, rising standard of living, fast urbanization, and accelerated industrialization. The economic development patterns of the Asia region have been highly affected in the current global economy and this region clearly has a wide spatial variation of energy use. The geographic variation of energy use in the Asia region is not only affected by the economic system of the individual country but also greatly affected by the energy structure of the adjacent countries, thereby it is needed to identify the determination factors that have strong influence on energy productivity and to investigate whether existence of the convergence of energy productivity within Asian countries which provide useful information for making effective policy to promote and improve the energy productivity in a great extent within Asian countries.The main goal of this dissertation is to examine and establish the link between energy productivity and its determinant factors as well as convergence or divergence of energy productivity for thirty-five Asian countries. For this purpose, we firstly calculated energy productivity for thirty-five Asian countries during the study period from 1991-2011 by using a Data Envelopment Analysis (DEA) approach. We then examined and established the link between energy productivity and its determinant factors employing the recently developed non-spatial panel models and spatial panel models for the full-sample countries and five different sub-sample countries. The results of the non-spatial panel models indicate that the majority of the determinant factors have a negative impact on energy productivity for the full-sample countries and five sub-sample countries during the entire study period. However, the results of the spatial panel models, the determinant factors of trade openness and foreign direct investment (FDI) have the positive influence on energy productivity for the full-sample countries and sub-sample countries. The results confirm that these determinant factors are positively associated with energy productivity in these nations. The results also show that improvement in energy productivity have significant effect on economic growth for selected sample countries. Likewise, this study found that determinant factor of industrial structure has a positive influence on energy productivity for the full-sample countries and four sub-sample countries (North Asia, South East Asia, South Asia and West Asia). This study also found that determinant factor of energy price has a positive impact on energy productivity for the full-sample countries and three sub-sample countries (North Asia, North East Asia and South Asia). It reveals that these two (industrial structure and energy price) determinant factors have significantly contributing to energy productivity improvement in these Asian nations during the study period 1991-2011. On the other hand, this study found that determinant factor of investment has a negative influence on energy productivity for the full-sample countries as well as sub-sample countries. Furthermore, the results of spatial lagged and error terms have a positive spillover effect on energy productivity for the full-ample countries as well as sub-sample countries during the study period from 1991 to 2011. This indicates that the empirical result is in favor of spatial panel models, which implies that spatial spillover effect is significant on energy productive improvement in these selected sample countries.We finally focus on empirical analysis of the convergence or divergence of energy productivity for the full-sample as well as five sub-sample countries (North Asia, North East Asia, South East Asia, South Asia, and West Asia) from 1991 to 2011. We first used the sigma-convergence approach to investigate the disparity of energy productivity during the study period. The sigma-convergence demonstrates that there is a clear evidence of convergence process in energy productivity for the full-sample countries as well as three sub-sample countries, namely, North East Asia, South Asia and West Asia throughout the study period from 1991 to 2011. This result corroborates the basic idea of sigma-convergence that measures the disparity of productivity level during the specific time period. On the contrary, North Asia and South East Asia show a very weak evidence of sigma-convergence process in energy productivity during the entire study period. This indicates that sigma-convergence of energy productivity is somehow convergence and divergence over the study period. We then used the beta-convergence models to estimate whether there exists an evidence of convergence in energy productivity across Asian nations during the study period by applying the spatial panel models (the spatial lag panel model (SAR), the spatial error panel model (SEM) and the spatial Durbin panel model (SDM)). The beta-convergence results reveal that there exists a convergence process in energy productivity for the full-sample countries and four sub-sample countries (North East Asia, South East Asia, South Asia, and West Asia). This empirical result supports with the basic idea of convergence theory that countries having comparatively low initial energy productivity levels catching up to high income countries. In contrast, the beta-convergence does not in favor of energy productivity in North Asia for the whole study period. This result does not corroborate the basic idea of convergence theory that poor countries tend to increase faster than rich nations. Furthermore, the results show that trade openness has a positive impact on energy productivity growth for the full-sample countries and five sub-sample countries for the whole study period. This control variable has become a major determinant factor in the process of convergence of energy productivity for the full-sample countries and five sub-sample countries.The findings of this dissertation provide useful information for these countries in order to make important strategies to improve and promote their energy productivity to boost the economic growth and sustainable development in Asia. The findings also provide vital information for these Asian nations to enhance technology transfer and promote trade between developed and less developed nations as well as to design effective energy and environmental policies.