What Role Do Economic Factors Play in the Energy Efficiency Changes in Developed and Developing Countries?

Abstract

Energy efficiency is a crucial concern worldwide, given the significant economic activities and extensive energy consumption. Therefore, further research is necessary to document the latest evidence in this field. The study aims to analyse the effects of various factors on energy efficiency changes, specifically focusing on economic growth, population growth, inflation, energy imports, and foreign direct investment (FDI). The research examines these influences in a sample of five developed economies and five developing economies over the period of 2010–2017. Analysing the relationship between the constructs was done using STATA. The proposed relationship is tested using a robust standard error and fixed effect model. The findings suggest a positive relationship between economic growth, population growth, inflation, energy imports, and FDI and changes in energy efficiency. This study provides valuable guidance to policymakers on formulating energy efficiency policies in the country.