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Jakarta Post

Energy and economic growth

  • Hanan Nugroho

Jakarta   /   Thu, July 15 2010   /  10:21 am

The rapid economic growth of the currently developed nations during the last half of the 20th century was attributed notably to the availability of cheap energy, contributed mainly by fossil fuels, especially petroleum. The challenge for developing countries nowadays is that the luxury of having plenty of cheap oil is no longer the case.Energy economic literature defines two important indicators: Energy intensity as the ratio between energy consumption to GDP, and energy elasticity as the rate of growth of energy consumption over the rate of growth of GDP.  In Indonesia, energy plays an important role not only as fuel to grow the economy, but also as principal contributors to the country’s export earnings, GDP and to government revenues. The significant contribution of energy to Indonesia’s economy was clearly notable during the oil boom period (late 1970s — early 1980s) where...