Effects of Energy Efficiency on Firm Productivity in Kenya’s Manufacturing Sector

Kenneth Kigundu Macharia, Dianah Ngui and John Kamau Gathiaka

Journal of Sustainable Development, 2022, vol. 15, issue 3, 90

Abstract: There is concern about probable energy efficiency and economic performance trade-off, particularly in developing countries which often require more energy consumption to spur their economies. This study assesses the relation between energy efficiency and total factor productivity in Kenya’s manufacturing sector by applying a sample of firms in the World Bank Enterprise Survey. Energy intensity is used as a proxy for energy efficiency while total factor productivity is estimated using the Levinsohn-Petrin Algorithm. A dynamic panel data model is applied in the analysis of the energy efficiency and total factor productivity relationship which is at the sub-sector and firm size levels. The sub-sectors of concern are- chemicals, pharmaceuticals and plastics, food, textile and garments and paper and other manufacturing sub-sectors. Firm sizes of interest are- small, medium and large. The findings show heterogeneity in energy intensity across sub-sectors. Total factor productivity is also found to be heterogeneous across sub-sectors and firms of different sizes. The estimates show that in general, energy efficiency significantly promotes total factor productivity. Other factors that promote total factor productivity include capital intensity, age, size, top manager’s years of experience, foreign ownership and exporting status. However, the effect of these variables varies across the sub-sectors and firm sizes. The study findings suggest that policies to improve energy efficiency should be accorded additional emphasis jointly with improvements in total factor productivity.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://ccsenet.org/journal/index.php/jsd/article/download/0/0/46987/50250 (application/pdf)
https://ccsenet.org/journal/index.php/jsd/article/view/0/46987 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ibn:jsd123:v:15:y:2022:i:3:p:90

Access Statistics for this article

More articles in Journal of Sustainable Development from Canadian Center of Science and Education Contact information at EDIRC.
Bibliographic data for series maintained by Canadian Center of Science and Education ().