The relationship between energy use and economic output for individual nations. Rapid economic growth is one of the defining characteristics of modern society.It is a principal goal of nearly every national government in the world. Gross world product, the total value of all goods and services produced, increased from $7 trillion in 1950 to about $70 trillion in 2007. Annual income per person increased by nearly factor of 5 in this period.

At root, economic growth is a physical process: energy is used to transform materials into useful goods and services. At an aggregate level, therefore, it is not surprising that there is a strong relationship between the quantity of energy a nation uses and the size of its economy, i.e., the quantity of wealth it produces. Therefore it follows that the largest economies (U.S., China, Japan) use considerably more energy than smaller economies. A similar spread appears if one compares per capita GDP and energy use, although some nations use energy more efficiently than others.

Given the importance of energy, it is not surprising that energy prices have an important effect on almost every major barometer of macroeconomic performance. For example, increases in energy prices contribute to recessions. Oil prices are an important driver behind stock price movements, and they are also key determinants of inflation and unemployment.

Two Sudanese women carrying fuelwood. Source: Sudan tribune Access to energy services is a key component of alleviating poverty and an indispensable element of sustainable human development. Without access to modern, commercial energy, poor countries can be trapped in a vicious circle of poverty, social instability and underdevelopment.

During the past twenty-five years, electricity supplies have been extended to 1.3 billion people living in developing countries. But between 1.5 and 2 billion have no access to electricity and more than 2 billion people rely on traditional biomass such as wood, agricultural residues and dung for cooking and heating. More than 99 percent of people without electricity live in developing regions, and four out of five live in rural areas of South Asia and sub-Saharan Africa.

Without modern energy services, millions of women and children face serious illness or premature death; basic social goods like health care and education are more costly in both real and human terms, and economic development is harder to sustain. The services that energy enables, such as electricity, can create conditions for improved living standards, especially in areas of public health, education, and family life.