ENERGY EFFICIENCY, INDUSTRIAL PRODUCTIVITY, AND ECONOMIC GROWTH: A PANEL ECONOMETRIC APPROACH

Abstract

This study examines the relationship between energy efficiency, industrial productivity, and economic growth using a panel econometric approach. In the context of growing energy constraints and sustainability challenges, energy efficiency is increasingly recognized as a key driver of productive and sustainable economic performance. Using balanced panel data across selected regions, this study applies Fixed Effects and Random Effects models, with the Hausman test employed to ensure estimator robustness. Energy efficiency is measured by energy intensity, while industrial productivity and economic growth are proxied by sectoral output and real GDP growth. The empirical results show that improvements in energy efficiency have a positive and statistically significant impact on industrial productivity, which in turn serves as an important channel for promoting economic growth. These findings indicate that energy efficiency not only reduces production costs but also enhances industrial competitiveness and macroeconomic performance. From a policy perspective, the results highlight the importance of integrating energy efficiency into industrial and economic development strategies to support sustainable and inclusive growth.