Industrial Energy Deficit as a Barrier to Industrialization and Sustainable Development in Developing Countries

Aim and tasks. The aim of the article is to develop and empirically test an Industrial Energy Deficit Index as a tool for analyzing infrastructure-related constraints on economic growth in developing countries, as well as to assess its relationship with international competitiveness and investment attractiveness in the context of countries’ participation in global value chains. The study substantiates industrial energy deficit as an independent category of the world economy, proposes a methodology for its quantitative assessment, and conducts an empirical analysis of its relationship with manufacturing value added and inflows of foreign direct investment. Methods. The methodological framework of the study is based on theoretical analysis, structural-functional and comparative approaches. A methodology for calculating an integrated Industrial Energy Deficit Index is developed, drawing on indicators of electricity supply reliability at the firm level. To ensure cross-country comparability, the indicators are normalized and combined using a differentiated weighting scheme. The relationship between industrial energy deficit, manufacturing value added, and foreign direct investment inflows is assessed using linear regression models. Results. The concept of industrial energy deficit is introduced and justified as a persistent mismatch between an economy’s industrial potential and the capacity of its energy system to provide reliable electricity supply to enterprises. The application of the index reveals substantial cross-country variation in the severity of energy constraints faced by the industrial sector. Empirical results indicate a statistically significant negative relationship between the level of industrial energy deficit, the share of manufacturing value added in GDP, and inflows of foreign direct investment. Conclusions. Industrial energy deficit represents a constraint on industrial development that is not captured by conventional indicators of energy poverty. High levels of industrial energy deficit reduce countries’ investment attractiveness and limit their participation in global value chains, thereby constraining long-term economic growth potential. The proposed index expands the analytical toolkit for studying energy-related development constraints and can be applied in the practical analysis of international economic relations.

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