Energy Use Beyond GDP : A Dynamic Panel Analysis with Different Development Indicators

This study analyses the role of energy use in countries with heterogeneous development paths. Energy is a fundamental input in human activities and a broad literature attests the link between energy and economic growth, usually measured by gross domestic product (GDP). We examine how this relationship varies dynamically depending upon the definition of development adopted. We compare GDP with adjusted net national income (a measure that corrects for the depletion of human-made and natural capital), as well as life expectancy and the human development index (HDI) . Applying a dynamic fixed effects model to different regions of the world, with a panel of 127 countries from 1970-2015, we find that energy plays a different role in fuelling short and long-run development, especially for countries in the global South. Results for different metrics differ across regions and even move in opposite directions over time and compared to GDP, as in the case of adjusted net national income in Sub Saharan African countries. Our results suggest different capabilities to move from extractive to sustainable paradigms of development, and emphasizes the importance of using a variety of metrics for human progress