Production and consumption based approach in analysing international spillovers of energy and its relation to development

Abstract

The world’s population growth causes increase in production and consumption of goods and services, on one side, and greater demand for land, energy and materials, on the other, leading to intensified global economic activity and global exchange of goods and services. International trade creates economic linkages among nations thus implying energy spillovers between industrialized countries or the so – called OECD and non-OECD countries. In this research paper, the production – based and the consumption – based use of energy and its correlation with economic growth is analyzed. The Multi – Regional – Input – Output (MRIO) methodology is utilized to determine the amount of direct and indirect use of energy related with products traded internationally. The analysis encompasses 49 countries and regions, 200 industrial sectors and 7 final demand categories in the period from 1995 till 2012. The main focus of the analysis sets on natural resources extraction, energy carriers use and emissions relevant to energy use. Different perspectives causing changes to both international trade patterns and global economic development are discussed. The production and consumption accounting showed a certain decline in the amounts of energy embodied in the foreign exchange of products within the developed countries. In contrast, the figures for the developing countries had an increasing tendency, but surprisingly higher shares of renewable energy use within the national energy mix.