RPR-2011-17 - ERIA

elasticity of energy consumption of countries with rapid economic growth driven byfactors such as industrialization and urbanization, whose further economicdevelopment may be restricted by high energy price and low-linkage between energyconsumption and income. In addition, we also show that the future energy demandof the whole region can be better projected when accounting for country-specificcharacteristics related to economic growth and institutional arrangements.The study may also offer policy makers a chance to understand countries’ futurepaths of energy demand. Current energy outlooks, such as Kimura (2011), oftenassume liner relationship between economic growth and energy demand and reply onhistory trend. This will create at least two problems: countries with low/high historydata will stay low/high, which are unrealistic. For example, the path of Cambodiaand China in Figure 5. The likely difference for the forecasting between China andCambodia is that Cambodia is on a long energy intensity path due to agriculturedominated economy which China is on a rapid growing energy intensity path due toindustrialization and urbanization.Figure 5: Economic Development and Energy Demand in Selected Countries,1990-2005Source: Kimura (2011).31