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consumption (from a better use of the different sectors) or to convergence
toward sectors that use less energy would be the best ways to reduce
differences in energy intensities and lower energy consumption per GDP unit.

This paper complements the literature and makes an original contribution
intending to discern the weight of differences within the energy sector and those
relative to final energy intensity in determining the differences in energy
intensities internationally and its evolution. In that respect, we use the Theil
inequality index as the synthetic benchmark index since it allows decomposition
by parts. Two types of decompositions will be done: the multiplicative
decomposition pioneered by Duro (2003) and implemented in the energy
analysis in Duro and Padilla (2006), and group decomposition (Shorrocks,
1980).

The paper is organized as follows. Section 2 lays out the methodology used. In
Section 3, we present the empirical results on cross-country energy intensity
inequalities for the period 1971-2006. Finally, Section 4 presents some
concluding remarks.

2. Methodology

Assessing the role the energy transformation index and final energy
consumption per GDP unit have played in the evolution of energy intensity
inequalities starts first from a simple bifactorial breakdown of energy intensity in
the following way:

PEt = PEt * ¹E-
GDP_lt FE_it GDPit
eit = fit * wit

where PEit is primary energy consumption of country i in period t, FEit is final
energy consumption, GDPit is the gross domestic product. Then, eit is energy
intensity, fit is the transformation index, which measures the efficiency of the

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