results may be due to the type of energy used in agricultural production. For example, agriculture in developing economies still relies heavily on human and animal labor, as well as traditional energy sources (e.g., firewood and livestock manure). In contrast, agriculture in developed nitrogen fertilizers, which are energy-intensive to manufacture); pesticides; large agricultural machinery (diesel fuel); large irrigation pumps; greenhouse heating and cooling; and electricity used for post-harvest processing and refrigeration systems. Nevertheless, developing economies are much lower than those in developed economies. aligns consistently with the stage of economic development. This suggests that structural characteristics of agriculture, resource endowments, and production methods may play a more decisive role than income level alone in shaping both productivity and efficiency outcomes. The empirical model incorporates several control variables, which, based on theory and prior physical capital (CAP), human capital, government policy, trade openness (OPEN), and farmland coverage (ALC). Specifically, physical capital is measured using net capital stocks in the agriculture, forestry, and fishing sectors, obtained from Food and Agriculture Organization (FAO)'s FAOSTAT. Human capital is proxied by the Human Capital Index (HCI), derived from years of schooling and measured using the Agriculture Orientation Index (AOl), which reflects the level of government APO PRODUCTIVITY OUTLOOK 2026 | ENERGY EFFICIENCY, PRODUCTIVITY IMPACTS, AND COMPOSITE INDICATOR DEVELOPMENT | 47
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2026-07-29
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