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NO. 2

Spring 2017

The Journal of Energy and Development
volume 42, number 2, spring 2017 (copyright 2017)

Melike E. Bildirici, “The Defense Industry Sector, Economic Growth, and Energy Consumption in
20 Emerging Countries,” The Journal of Energy and Development, volume 42, number 2 (spring
2017, copyright 2017), pp. 147–159.

Both energy consumption and the defense industry sector have major impacts on a nation’s economic
growth. Defense expenditures related to militarization and energy consumption play a vital role on the
economic growth of the countries. While on the one hand, economic growth accelerates the defense
industry sector and energy consumption, on the other hand, defense expenditures stimulate energy
consumption and economic growth. The relationship among economic growth, energy consumption, and
the defense industry sector is complex and interrelated.
This paper aims to test the relationship among economic growth, energy consumption, and the defense
industry sector in 20 emerging countries from 1987 to 2015 via panel cointegration and panel causality
tests. The paper’s results determined that there was a relationship among the defense industry sector,
energy consumption, and economic growth. Further, we applied the Pedroni cointegration test and
FMOLS and DOLS long-run estimators and found a positive and a significant causal relation between the
variables. Last, we applied the Granger causality test, which determined bidirectional causality between
energy consumption and the defense industry sector, between economic growth and the defense industry
sector, and between energy consumption and economic growth.

Keywords: economic growth, emerging consumption, defense industry sector, panel Pedroni test,
FMOLS, panel Granger causality

Mohammed Alsahlawi and Omar Al-Titi, “Gasoline Demand in Saudi Arabia: An Empirical
Analysis Using an Autoregressive Distributed Lag (ARDL) Technique,” The Journal of Energy and
Development, volume 42, number 2 (spring 2017, copyright 2017), pp. 161–188.

The short- and long-run relationships of the aggregate gasoline demand function in Saudi Arabia were
empirically estimated over the 1973–2015 period by considering multiple endogenous breaks. For the
analysis, we used an autoregressive distributed lag (ARDL) bounds testing approach to cointegration, as
suggested by Pesaran et al. (2001). The demand for gasoline was found to be inelastic with respect to
price and income in the short run and the long run. Compared with those of other countries, the gasoline
demand elasticities in Saudi Arabia more closely resemble those in industrial countries. Furthermore,
gasoline consumption was found to adjust toward its long-run level, with approximately 17.8 percent of
the adjustment occurring in the first year.

Keywords: gasoline demand, ARDL, bound testing, structural break, Saudi Arabia

Mark Olsthoorn, Joachim Schleich, Laurent Javaudin, and Yi Jiang, “Barriers to Energy
Efficiency in Developing Countries’ Industry Sectors: Empirical Evidence from Clean Development
Mechanism (CDM) Projects,” The Journal of Energy and Development, volume 42, number 2
(spring 2017, copyright 2017), pp. 189–221.

This paper conceptually and empirically analyzes barriers to adoption and implementation of industrial
energy efficiency technology in developing countries. We distinguish between micro- and macro-level
barriers and highlight differences between more- and less-industrialized developing countries. Based on
197 Clean Development Mechanism (CDM) project design documents, barriers to energy efficiency are
identified for projects related to industrial energy efficiency. Results from econometric analyses suggest
that projects in lower-income countries experience a wider set of barriers, most of which act at the micro
level. The most relevant barriers at the micro level are technical and financial risks. At the macro level,
the most relevant barriers are lack of human capital, lack of technical infrastructure, and lack of access to
external capital.

Keywords: energy efficiency, barriers, barrier taxonomies, developing countries, Clean Development
Mechanisms (CDM), industry, econometrics, technology transfer, China, India

Jean-Paul Arnaout, “Forecasting Kuwait’s Electricity Consumption Using Genetic Algorithms,”

The Journal of Energy and Development, volume 42, number 2 (spring 2017, copyright 2017), pp.

The electricity consumption in Kuwait has been rising rapidly over the past few years, placing Kuwait
as the first world-wide in electricity consumption. Therefore, forecasting this consumption is critical for
future energy prediction and planning, as well as electricity generation and subsidization. In this paper, an
estimation model is proposed to forecast the electric consumption in Kuwait based on the following
socioeconomic indicators: population, gross domestic product, import, and export data. The model’s
factors are optimized using genetic algorithms, leading to a minimal forecasting error. The genetic
algorithm parameters were established using design of experiments. The optimized estimation model’s
success is highlighted by comparing its results with the least squares method and the actual consumption
over an 8-year period (2007–2014). Finally, the model is used to forecast the electricity consumption in
Kuwait up to year 2026.

Keywords: electricity, consumption, genetic algorithm, Kuwait, forecast, least squares, static method

Yris D. Fondja Wandji and Subhes C Bhattacharyya, “Evaluation of Economic Rent from
Hydroelectric Power Developments: Evidence from Cameroon,” The Journal of Energy and
Development, volume 42, number 2 (spring 2017, copyright 2017), pp. 239–270.

The exploitation of hydro resources for generating electricity at cheaper cost gives rise to significant
economic rent to owners. Cameroon, which has significant hydropower potential, is engaged in
developing the resources. Thus, the main goal of this study is to calculate the potential economic rent that
could be generated in the Cameroonian hydropower sector in order to meet the electricity needs and to
achieve the “Cameroon 2035 Vision” promoted by the government. In this article, the hydropower rent is
calculated for the whole country as the difference between optimized total costs of two hypothetical
systems: one with hydropower and the other without hydropower. We also analyze the sensitivity of the
rent estimation due to variations in some key parameters. Using the LEAP software system, our
calculation gives a value of 16.937 Euro/MWh of hydropower rent for the median scenario concerning the
future demand trends. This rent is in the range of values found by Amundsen and Tjøtta (1993), Banfi et
al. (2005), and Shrestha and Abeygunawardana (2009) for Norway, Switzerland, and Nepal, respectively.

Keywords: economic rent, hydropower, Cameroon

Samuel Gamtessa, “Price and Income Elasticity of Oil Import Demand under Foreign Exchange
Constraints,” The Journal of Energy and Development, volume 42, number 2 (spring 2017,
copyright 2017), pp. 271–285.

This paper estimates income and price elasticity of oil import demands in eight sub-Saharan Africa
countries (Ethiopia, Kenya, Malawi, Rwanda, Tanzania, Uganda, Zambia, and Zimbabwe), which depend
entirely on imports for their petroleum demand, by controlling for foreign exchange reserve using panel
dynamic generalized method of movement (GMM) estimation techniques. The results show that the
foreign exchange reserve is more important than price in determining oil imports in these countries. The
policy implication is that securing foreign exchange sources is an important policy toward securing
energy access, which is vital for sustaining economic growth.

Keywords: oil import demand elasticities, import capacity, African countries, panel system GMM,
Ethiopia, Kenya, Malawi, Rwanda, Tanzania, Uganda, Zambia, Zimbabwe

Book Review of The New Geopolitics of Natural Gas by Lee Morrison, pp. 287–291.