Data description

The analytical measures described in the preceding section are applied to a dataset of 17 APEC economies for the period 1991-2000. The APEC economies include Australia, Canada, Chile, China, Hong Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New Zealand, Peru, the Philippines, Singapore, Taiwan, Thailand, and the United States. Brunei Darussalam, Papua New Guinea, Russia, and Vietnam in APEC are not included due to a lack of data. Then 15 economies among the above 17 APEC economies are selected to do the panel data analysis, except South Korea and Singapore, since there is a limitation of data. The data of value-added percents of GDP by industry and service sectors for every economy are taken from World Development Indicators (World Bank, 2005).

To solve the data comparability problem, there are only two practical alternatives: the average rates of exchange and the purchasing power parity (PPP) as measured by OECD (Edvardsen and Førsund, 2003). Usually GDP measurements are commensurate with the exchange rate method. It is often argued in the literature that the PPP method of equivalent GDP should be used to obtain valid cross-national comparisons (Reister, 1987). This study chooses the PPP method to measure GDP.

There are three inputs and one output factor analyzed in this study. As for energy, the three inputs are capital stock, labor employment, and energy consumption. With respect to CO2 emissions, the three inputs are capital stock, labor employment, and CO2 emissions. The single output is all selected as real growth, gross domestic production (GDP) using purchasing power parties. It is expressed in 1995 US dollars. The data of GDP using purchasing power parties and the total energy consumption are from Energy Balances of OECD Economies (IEA, 2002a) and Energy Balances of Non-OECD Economies (IEA, 2002b). The data of CO2 emissions comes from Marland et al. (2005).

The data of labor and capital stock come from the Penn World Tables (Heston et al., 2002). Multiplying capital stock per worker by labor retrieves the capital stock. However, for China, Indonesia, Malaysia, and Singapore, the data on capital stock per worker are not available. They are calculated using the perpetual inventory method:

(1 ) 1

t t t

K = + −I δ K₋ , (15) where I denotes gross investment, which is estimated by first multiplying the real _t investment share by real GDP, at time t; and δ is the depreciation rate.

The choice of the rate of depreciation is problematic due to the difference between the developed economies and the developing ones. The perception is that developed economies can afford to update their equipment and apply new technology. Thus, the rate of depreciation of those economies may be greater than that of the developing ones. However, due to their backwardness and hence the leapfrogging effects, some developing economies may actually be able to adopt new technology faster than developed economies. Unless detailed data at the sector or firm level are available, it is difficult to derive a precise rate of depreciation (Wu, 2004). While the potential impact of the choice of the rate of depreciation is noted, due to data constraints this paper applies a unified rate of depreciation of 5%.

The units of real GDP, real capital, labor, energy consumption, and CO2

emissions are billions of US$, billions of US$, 10,000 people, millions tons of oil equivalent (Mtoe), and millions tons of carbon (Mt-C), respectively. Table 5 lists the average annual amounts and growth rates of real GDP, labor, real capital, energy consumption, and CO2 emissions for 17 APEC economies. The United States, China, and Japan are the first three having real GDP, labor, real capital, energy consumption, and CO2 emissions among APEC economies. China has the highest growth rate of real GDP (9.2%). However, the growth rates of energy consumption and CO2 emission, 1.1% and 0.9% respectively, in China are far less than average of those, 4.1% and 3.4%, among APEC economies. Singapore with the second highest economic growth rate only has the modest growth rates of energy consumption and CO2 emissions with the second highest growth rate of labor. The East Asian economies, with the exception of Japan, Indonesia, and the Philippines, indeed achieved high economic growth in the 1990s. In those economies, high economic growth rates matched the rapid expansion of capital stocks. On the other hand, the average labor growth was rather modest and quite even across all APEC economies.

Energy consumption and CO2 emissions growth rates also exhibited a similar pattern with real GDP growth rates. As Table 5 shows, the Southeast Asian economies, except Singapore, have the highest average annual growth rates in energy consumption and CO2 emissions. Among APEC economies, Hong Kong, the only one economy with negative growth rate of labor but the highest growth rate of real capital, has the highest average energy consumption growth rate (9.4%), Malaysia has the highest average CO2 emissions growth rate (7.1%), and Mexico has both the lowest growth rate (0.2%) in energy consumption and CO2 emissions.

We also can find that the energy consumption and CO2 emissions has very high correlation. That means that an economy consuming more energy emits more CO2.

Table 6 shows the percentages in total energy consumption and CO2 emissions of APEC economies. The United States is the largest energy-consuming and CO2

-emitting economy with almost half of the total energy consumption. For the other half of energy consumption, China, Japan, and Canada consume respectively around 20%, 11%, and 7% of the total energy consumption during the research period. The other 13 economies use only less than 13% of total energy consumption. The United States, China, and Japan, the largest three CO2-emitting economies, have about eighty percentages of the total CO2 emissions. During the ten years, the percentage in total energy consumption and CO2 emissions does not change drastically among APEC economies.

Table 5 Average annual amounts and growth rates of real GDP, real capital, labor, and energy consumption (1991-2000) Canada 707.86 2.9 1287.13 7.9 1500.7 1.2 126.45 1.9 121.54 1.8 Chile 112.04 5.8 155.5 13.3 551.45 2.0 11.2 5.6 13.11 5.9 China 3394.72 9.2 4122.14 14.7 73080.42 0.9 561.2 1.1 802.85 0.9 Hong Kong, China 138.49 3.2 226.59 15.5 329.07 -0.2 10.77 9.4 8.85 2.5 Indonesia 541.37 3.3 1033.7 7 7763.12 1.9 50.88 6.1 56.36 3.5 Japan 3079.92 1.1 7183.32 7.9 7963.75 0.3 326.69 1.4 309.39 0.8 South Korea 620.89 5.2 1304.9 12.7 1904.38 1.2 105.29 6.1 98.4 4.9 Malaysia 154.71 6.1 263.4 16.6 739.56 2.5 22.14 7.2 29.06 7.1 Mexico 723.02 3.1 958.6 9.6 3169.47 1.8 94.15 0.2 101.48 0.2 New Zealand 64.27 2.8 107.59 7.6 172.7 1.4 11.87 3.2 7.81 3.0 Peru 102.7 3.8 144.6 8.8 1005.13 4.3 7.59 3.6 6.77 3.2 Philippines 255.98 2.9 226.56 9.7 2791.67 2.5 14.57 6.2 17.34 5.5 Singapore 69.89 7.0 274.78 7.8 179.55 3.2 8.74 4.2 14.75 2.4 Taiwan 324.35 5.4 518.57 8.3 934.49 0.9 41.98 4.4 48.21 5.9 Thailand 341.43 3.5 748.04 13.6 3143.27 0.9 35.27 6.3 46.98 5.7 United States 7758.29 3.3 11191.59 10.1 13395.57 1.3 1400.83 1.4 1446.39 1.9 Average 1105.46 4.2 7030.42 1.6 1709.34 10.5 170.25 4.1 188.98 3.4 Notes: (1) Statistics in the ‘GDP,’ ‘Capital,’ ‘Labor,’ ‘Energy,’ and ‘CO2 Emissions’ columns are mean

percentage rates of growth. (2) The base year for real GDP and real capital is 1995. (3) Source:

Penn World Tables, IEA Statistics 2002 Edition, Marland et al. (2005).

A correlation matrix is given in Table 7 that shows a high correlation exists between input and output factors selected for this analysis among APEC economies.

As shown in Table 7, all inputs have positive correlation coefficients with the output.

That is, all inputs satisfy the isotonicity property with the output. Labor employment, capital stock, energy consumption, and CO2 emissions do actually correlate to GDP performance in this analysis model. The correlation coefficients between energy input and GDP output and CO2 emissions and GDP are calculated as 0.98 and 0.97, respectively, which are statistical significant. The relation reveals that the more energy is consumed, the more GDP is generated. The more GDP is generated, the more CO2 is emitted. However, energy efficiency and CO2 abatement efficiency need to be analyzed in this study in order to learn individual efficiency scores for all APEC economies.

Table 6 Percentage in total energy consumption and CO2 emissions of APEC economies in 1991, 1995, and 2000 Note: The unit is percentage.

Table 7 Correlation Coefficients between inputs and the output for APEC economies Real Capital

Stock Labor Energy

Consumption CO2 Emission

Real GDP 0.95 0.46 0.98 0.97