The effect of democracy on energy efficiency in European countries

Abstract

This study explores to what extent the development of democracy affects energy efficiency. This study applies database reference from Freedom House, Polity IV project, International Country Risk Guide (ICRG) and World Development Indicator (WDI) to analyze the relationship between the level of democracy and energy efficiency of 35 countries in Europe from 1990 to 2013. Controlling for manufacturing value-added, price level, and GDP per capita, we find a significant statistical correlation between the level of democracy and the level of energy efficiency in a country. Empirical findings show that a high level of democracy has a significant positive impact on the improvement of national energy efficiency. Further examinations which employ quantile regression estimates indicate that the positive impact of democratic consolidation is stronger when the country is at the stage of relatively low energy efficiency. Empirical research also demonstrates that the consolidation of democratic institutions and economic development has a positive influence on the awareness of environmental conservation, thereby improving the structure of energy consumption and further reinforce the enhancement of energy efficiency.

Effect of Foreign Direct Investment on Energy consumption: Does Institutional Quality matter? Evidence from Cote d'Ivoire

“…Thus, the results seem to indicate that the country needs to reach a certain level of quality of democracy for an energy efficiency. These explanations support the economic implications of the empirical work of Chou and Zhang (2020), according to which a high level of democracy has a significant positive impact on improving national energy efficiency. Therefore, our results highlight the need for institutions and policies that promote the establishment and strengthening of democracy in the country.…”

Political Environment and the Use of Energy Resources in Nigeria

“…Boräng et al (2016) and Ahlborg et al (2015) considered the significance of institutional quality and democracy in determining the per capita electricity consumption of household in African countries and Small Island Developing States respectively with the results showing that democracy has a significant positive effect on per capita household electricity consumption. However, Chou and Zhang (2020) in a study of some selected European countries express that democracy has a significant positive influence on energy efficiency.…”