Energy efficiency and productivity in emerging and developing Asian countries: A firm level analysis

Abstract

The Asian region has experienced tremendous growth in recent years. As in therest of the world, this progress has led to significant energy consumption, which in turn is having a major environmental impact. As a result, energy efficiency strategies have become the order of the day for many industries. However, the relationship betweenproductivity and energy efficiency has hardly been studied at thefirm's level. This paper uses three measuresfor a comprehensive analysis of firm-level productivity and energy efficiency in Asian emerging and developing countries. Data from the World Bank Enterprise Surveys (WBES) from 2011 to 2016 are used for the empirical analysis. The results show that manufacturing businesses' Productivity ispositively associated with energy efficiency acrossthe region. These results are robust acrossall three energy efficiency measures, accounting for heterogeneity by countryand industry, and are consistent with Porter's hypothesis that improving environmental quality leads tohigher firm Productivity. Thus, the results support the proposition that improving energy efficiency contributes to increasing manufacturing firms' Productivity. Therefore, focusing on energy efficiency should bean integral part of policy-making for companies looking to increase output as well as to improve environmental quality.