Chapter One - Energy–growth nexus and economic development: a quantile regression for panel data

Abstract

In a context of energy transition, the objectives of both economic growth and sustainability are increasingly influenced by political agendas worldwide. Assuming that growth and sustainability may be divergent, the question of how they are measured arises. Therefore this chapter considers two different approaches: the economic growth approach, using the standard real gross domestic product per capita; and the sustainable development approach, using the index of economic and sustainable welfare. With a time span from 1995 to 2014, for 55 countries around the world, a quantile regression model for panel data was used to analyze energy use, economic growth, and sustainability. The novel aspect of this chapter is not only to analyze and compare economic growth and approaches to sustainable development, but also to carry out the analysis by level of income and development. This option sheds light on some of the inconsistencies documented in the literature. The quantile estimation regression was estimated step by step. The results proved that the effect of energy use is quite different to sustainability and economic growth approaches. Energy use plays a different role in each level of income; positive, neutral, and negative for lower, middle, and upper income level, respectively. While the consequence is negative for lower and middle on sustainability level, it is positive for high sustainable countries. Overall, this chapter provides evidence for the need to devise different policies depending on whether they are focused on economic growth or sustainable development.