Intangible capital and sectoral energy intensity: Evidence from 40 economies between 1995 and 2007

Abstract

Intangible capital has been found to be an increasingly important source of productivity and economic growth. However, its effects on energy intensity have received little attention. Given the importance of reducing energy intensity, this study advances the understanding of the relationship between intangible capital and sectoral energy intensity by taking advantage of a rich dataset of 40 economies derived from the World Input-Output Database (WIOD), spanning across 13 years (1995–2007). A relatively robust causal relationship between intangible capital and sectoral energy intensity has been identified. The qualitative and quantitative interactions of this relationship with income level and sectoral heterogeneity have also been revealed.It is found that the effect of intangible capital on reducing sectoral energy intensity generally diminishes along with increasing income level but a moderate quadratic relationship is identified in some types of intangible capital. Finally, sectors where intangible capital have the largest and smallest effect are also pinpointed.