World energy intensity revisited: a cluster analysis

Abstract

The aim of this article is to empirically identify convergence clubs in energy intensity among 109 countries from 1971 to 2010 by using a recently developed methodology, i.e., a new regression-based convergence test, introduced by Phillips and Sul (2007). This log t test allows us to endogenously identify the groups of countries that converge to different equilibriums and those that do not converge to any convergence clubs. We mainly find that, first, world countries do not seem to converge at the same steady-state level; instead, they form four separate clubs converging to their own steady-state paths and few countries are found to converge to no group at all. In addition, although the world as a whole shows the evidence of convergence, economic and geographic groups seem to converge at different speeds. Last, estimates from an ordered-logit model reveal that initial energy intensity level and openness are mainly responsible for the formation of the world convergence clubs, whereas industry share and R&D share are not.