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Does Economic Growth Stimulate Energy Consumption? The Role of Human Capital and R&D Expenditures in China

Shahbaz, Muhammad and Song, Malin and Ahmad, Shabbir and Vo, Xuan Vinh (2021): Does Economic Growth Stimulate Energy Consumption? The Role of Human Capital and R&D Expenditures in China.

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Abstract

This study evaluates the link between human capital, energy consumption, and economic growth using data for the Chinese economy from 1971 to 2018. To test the cointegration relationship between disaggregated energy, human capital, and economic growth, a bounds testing approach is applied by taking the structural breaks into consideration. The estimated results confirm that these variables are integrated. Further, human capital accumulation has a statistically significant negative effect on all types of energy consumption. We note a positive link between energy usage and economic growth. However, a significant negative relationship is found between R&D expenditures, and energy consumption. The results also show a one-way causal effect of human capital on all forms of energy consumption. However, the association between economic growth, dirty energy usage, and clean energy usage remains interdependent, indicating a feedback effect. Further, energy consumption and R&D exhibit bidirectional causal relationship.

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