The Determinants of Energy and Electricity Consumption in Developed and Developing Countries: International Evidence

Aim and background-As research on the energy and electricity consumption determinants yields mixed results and a multifactorial model has not yet been developed, our study aims to investigate the growth dynamics of the factors that affect energy consumption in developed and developing countries. Motivation-The current global energy crisis has led us to a thorough investigation of the determinants that are affecting it. Hypothesis-It is hypothesized that a set of macro-financial, macro-environmental, and institutional variables are factors that causally affect energy and electricity consumption in a holistic model. Methods-This research uses the data from 109 countries within a multivariate panel framework taken during 2010-2018, through the error correction, dynamic cointegration econometric methodologies, and causality tests. Results-The results indicate a coherent model with high interpretive power (80%) and that the main determinants of energy consumption in developing countries are economic growth, investment, and winter temperature, whereas, in developed countries, the determinants are trade openness, corruption, and innovation. Conclusion-Because energy consumption and economic growth share a bilateral relationship, the conservation of energy policy measures must be implemented according to the income category in which the country is classified.

Automated summary

This study aims to investigate the growth dynamics of factors affecting energy consumption in developed and developing countries. The results show that economic growth, investment, and temperature are the main determinants of energy consumption in developing countries, while trade openness, corruption, and innovation are the main determinants in developed countries. Therefore, energy policy measures should be implemented according to the country's income category.