Why is energy needed for economic development of our country? Discuss.
Answers
Answer:
Energy development, interpreted broadly to mean increased provision and use of energy
services, is an integral part of enhanced economic development. Advanced industrialized
societies use more energy per unit of economic output and far more energy per capita than poorer
societies, especially those still in a pre-industrial state. Energy use per unit of output does seem
to decline over time in the more advanced stages of industrialization, reflecting the adoption of
increasingly more efficient technologies for energy production and utilization as well as changes
in the composition of economic activity (see, e.g., Nakicenovic 1996). And energy intensity in
today’s developing countries probably peaks sooner and at a lower level along the development
path than was the case during the industrialization of the developed world. But even with trends
toward greater energy efficiency and other dampening factors, total energy use and energy use
per capita continue to grow in the advanced industrialized countries, and even more rapid growth
can be expected in the developing countries as their incomes advance.
The fact that expanded provision and use of energy services is strongly associated with
economic development leaves open how important energy is as a causal factor in economic
development. Development involves a number of other steps besides those associated with
energy, notably including the evolution of education and labor markets, financial institutions to
support capital investment, modernization of agriculture, and provision of infrastructure for
water, sanitation, and communications. This is not just an academic question; energy
development competes with other development opportunities in the allocation of scarce capital
and in the allocation of scarce opportunities for policy and institutional reform.
