Labor Productivity and Energy Use in a Three Sector Model: An Application to Egypt

Abstract This paper presents a model of a developing economy with three sectors—a modern sector producing products and services, a traditional sector producing agricultural goods, and a third sector providing energy. Modern and energy sectors are assumed to be demand-constrained; the agricultural sector is supply-constrained. Through the supply constraint, the price-clearing agricultural sector can impose an inflationary barrier on growth. Further, emphasis is placed on the sources of productivity growth. Specifically, higher energy intensity rather than increases in energy productivity enable labor productivity growth, with the attendant complications for “green growth.” Arabic Abstract: