Determinants of Energy Use in Turkish Manufacturing Industry: A Supply Side View

Istemi Berk () and Hakan Yetkiner ()
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Istemi Berk: Dokuz Eylul University, Department of Economics
Hakan Yetkiner: Izmir University of Economics, Department of Economics

World Journal of Applied Economics, 2024, vol. 10, issue 2, 55-71

Abstract: This paper aims to assess the supply-side determinants of firm-level energy use. To this end, we first propose a model for a stylized economy using Solovian framework, in which the production function employs energy input, along with capital and labor. We show the full algebraic solution of the model at the steady-state and in the transitional period and derive the supply-side determinants of energy consumption. Then, using firm-level micro panel data on the Turkish manufacturing industry from 2009 to 2015, we test the proposed model with static and dynamic panel data estimators. Our empirical results suggest that the proposed model is consistent with Turkish manufacturing data. Out of the supply-side determinants, firms’ output/value-added and total factor productivity, as a proxy for technological progress, are found to be the most significant determinants of firm-level energy use. Estimations also reveal quite heterogenous effects of technology on energy use in different manufacturing subsectors. Hence, although promoting technological change in the manufacturing industry is, without a doubt, the most convenient way to reduce energy use, policymakers should develop sector-specific incentives to achieve this goal.

Keywords: Solow model; energy use; manufacturing industry; firm-level micro panel data (search for similar items in EconPapers)
JEL-codes: C33 L60 O41 Q41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ana:journl:v:10:y:2024:i:2:p:55-71

DOI: 10.22440/wjae.10.2.2

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