Energy-saving Effect of Technological Progress in Iranian Economic Sectors: A Growth Accounting Application

Abstract

E nergy as an input of production is one of the main production factors in Iranian economic growth. Unfortunately, this growth leads to the high energy intensity in economic sectors in which its management is essential for policymakers and planners in Iran. One of the main issues in energy management is the impact of technological progress on saving energy. Respectively, this study is to analyze the relation of energy intensity and technological progress by Cob-Douglas production function between 1979 and 2015 for the Iranian agriculture, industry, and service sector with using panel data analysis and growth accounting model. The results indicate that technological progress will reduce the growth rate of energy intensity in the industry sector by 6.1%, in the agriculture sector by 8.9%, and in the service sector by 7.2%. Also, unlike the agriculture and service sector, the impact of technological progress on energy saving in the industry sector explains only 64% of total variations. The rest of changing in the energy intensity of the industrial sector is about 36% due to a decline in labor employment during the study period.