Sectoral convergence analysis of primary energy consumption in Turkey

This study aims to analyze the energy consumption of sectors using the Phillips-Sul Club Convergence model and examine the relationship between sectoral value-added, energy consumption, and energy price deviations using Quantile Regression via Method of Moments. In the first phase of the study, a Club Convergence analysis of energy consumption is conducted. The study focuses on the primary sectors and their sub-sectors in Turkey between 1992 and 2021, with natural gas and petroleum products selected to represent energy consumption due to their significant share in both consumption and imports, as well as their importance in terms of energy dependency. In the second phase, data on factor costs and value-added for sectors from 2009 to 2021 are examined to analyze the impact of energy consumption and energy price deviations on value-added. The results obtained from the first phase of the analysis identify converging sectors in terms of natural gas and petroleum product consumption. For natural gas consumption, one sub-club is formed among the sectors, while three sub-clubs are identified for petroleum consumption.In the second phase of the analysis, according to the Quantile Regression via Moments results applied to the converging sectors, it is determined that petroleum consumption positively affects the value-added and factor cost of sectors at all quantiles. This effect is more pronounced in sectors with higher value-added. The p-values for all quantiles are less than 0.05. The coefficients range between 0.1495 and 0.1783. It was also found that deviations in petroleum prices negatively affect the value-added of high value-added sectors.When examining the sectors' natural gas consumption, a positive and significant relationship with value-added is observed. The p-values for all quantiles are less than 0.05. The coefficients range between 0.3049 and 0.4196. It is proven that natural gas consumption has a stronger impact on sectors with higher value-added. When the effect of deviations in natural gas prices is examined, it is found that price deviations have a stronger effect on sectors with lower value-added.