Abstract
In this paper, we examine the energy efficiency performance of the Belt and Road Initiative (BRI) countries using a newly developed panel data stochastic frontier model that allows for estimation of both persistent and transient efficiency while controlling for random country effects and noise. By this, we contribute to the energy economic literature by providing a complete picture of the level of persistent, transient, and total energy efficiency estimates from a cross country perspective for a panel of 48 BRI countries during the period 1990–2015. Adding that there is little evidence to support energy efficiency convergence in the energy economic literature, we went further to check whether energy efficiency converges in the BRI countries. The results show that (1) persistent efficiencies are much lower than transient efficiencies, suggesting that the energy problem in the BRI countries is more of a structural issue; (2) while energy efficiency varies widely across the countries, high-income countries perform better than the lower-income countries; (3) there is evidence of efficiency convergence and it accelerates when trade increases, but decreases when the industrial sector increases. Based on these findings, we propose some policy implications.
Highlights
In 2013, the Chinese President, Xi Jinping launched the Belt and Road Initiative (BRI) to stimulate and foster economic growth in neighboring European, Asian, and African countries
The specification of the stochastic frontier approach, according to the energy demand frontier is as follows: EDct = β0 + xct β + εct where the dependent variable EDct is the aggregate energy demand in country (c) at time (t) and xct represents the vector of inputs that influences the demand for energy services: price of fuel (P), gross domestic product (GDP), population density (PD), share of value from the service sector (SS), the share of value from the industry (IS), and underlying energy demand trend (UEDT)
Countries by differentiating between transient and persistent energy efficiency using a series of models
Summary
In 2013, the Chinese President, Xi Jinping launched the Belt and Road Initiative (BRI) to stimulate and foster economic growth in neighboring European, Asian, and African countries. This initiative encompasses 65 countries (most of which are developing economies), representing about 60%. The BRI is expected to drive a new round of global economic boom in countries along the BRI region [1], but there are concerns from experts and the international community about the potential environmental consequences concerning energy use One of the key focuses of the BRI is to improve energy supply, energy efficiency, and supply clean energy within the region [2]. To ensure the success of these programs and to take full advantage of these regional and national measures, a deeper understanding of energy efficiency assessment is essential to set the right targets to attain the energy efficiency objectives
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