engleski

Energy Intensity Analysis in Comparison of the EU vs. Croatia

Energy is an essential input and in theory in the long run energy availability could constrain economic growth. The relationship between energy consumption and economic growth, that is, the energy intensity, is relevant not only for it affects future trends of development of all economies, but especially because it brings to discussion the issue of sustainability. The relationship between energy consumption and economic growth is now well established in the literature, yet the direction of causation of this relationship remains controversial. That is, whether economic growth leads to energy consumption or that energy consumption is the engine of economic growth. The direction of causality has significant policy implications. Empirically it has been tried to find the direction of causality between energy consumption and economic activities for the developing as well as for the developed countries. The economies of central and eastern Europe have traditionally been very energy intensive. Energy intensity (defined as energy use per GDP) has decreased in the course of transition, but progress has been uneven and most transition countries still use several times as much energy per unit of output as EU countries. Energy prices and progress in enterprise restructuring are the two most important drivers for more efficient energy use. Energy use depends on socio-economic and environmental circumstances – such as comparative advantages for energy-intensive activity, resource endowment, population density and climate while energy efficiency is a measure of how resourcefully energy is used under these conditions (and given prices).

energy; Croatia; EU

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