Determinants of energy intensity in South Africa: Testing for structural effects in parameters

Abstract

A cursory look at South Africa's energy data reveals that, energy intensity has consistently declined for the past two decades. The logical question that ensues is; what might have contributed to this phenomenon? The current study aims to investigate how different phenomena have contributed to the decline in South Africa's energy intensity. The study also tests for structural effects in the model parameters. The result showed that the de-industrialisation since 1980 and the changes in trade structure in favour of more imports have contributed significantly to the decline in energy intensity, in South Africa. Also, the current industry composition has induced technological transfer via FDI (Foreign direct inflows) and this has contributed to the decline in energy intensity levels, in South Africa. The individual effect analyses showed that each of the predictors shared significant amount of variance with the regression effect. Finally, there are significant structural effects in the parameters, and this has rendered the effects of regressors asymmetric.