Energy Use and GDP Growth, 1950-97

Abstract

This paper investigates the relationship between economic growth and growth in energy use in the latter part of the 20th century. The period is divided into five sub-periods, covering the low oil price era before the first energy crisis, the high oil price era, 1974-86, and a ten-year period after the drop in oil prices in 1986. It is found that the relationship between growth in energy use and gross domestic product (GDP) growth became weaker after the first energy crisis, but, after 1986, it seems to have become stronger again in rich countries. Energy use tends to grow more slowly than GDP in rich countries, while the opposite is true for poor countries, reflecting the fact that the energy intensity of GDP falls after countries have reached a certain level of affluence. One intriguing exception to this is China.