Energy Dependence and Economic Growth

European economies’ dependence on imported energy supply is one of the main problems of the region within the last 50 years. European Commission along with the World Bank emphasizes the importance of the diversification of the energy sources to renewable energy through the Climate Policies. This paper focuses on the possible solution of energy supply dependence of the region through the use of energy productively. Energy is one of the leading inputs in production and essential for the economic growth. The attempt in this paper is to examine how much of use of energy efficiently in production would effect this relationship. Standardized General Methods of Movements method is used for econometric analysis for the 1990-2015 period for 49 European and Commonwealth countries. Findings in this study suggests that, when controlled for productivity being an importer does not affect the economic performance of these countries. Further, energy productivity by itself significantly improves the economic performance