Energy prices and the economic performance of firms in emerging countries

Understanding the relationship between energy price dynamics and competitiveness is key to the debate on the transition to environmental and economic sustainability. In particular, emerging economies, where sectors and firms are less mature and more fragile to external shocks, need special consideration. This paper provides evidence that growing energy prices do not harm economic performances and can even strengthen it in some cases. The analysis is based on a panel of firms from 12 sectors and 11 high and middle-income countries, over the years 2002-2013. The empirical strategy used in the paper highlights that the size and direction of the impact of growing energy prices depends on firms’ energy intensity, among other characteristics. This should be taken into account in empirical studies focusing solely on average effects.