Electricity consumption and Economic growth: A panel data approach to Brics countries

Khobai, Hlalefang (2017): Electricity consumption and Economic growth: A panel data approach to Brics countries.

Abstract

This paper serves to investigate the causal relationship between electricity consumption and economic growth in the Brics countries during the period 1990 – 2014. Carbon dioxide emissions and urbanisation were included as additional variables to form a multivariate framework. The Kao panel co-integration and Johansen Fisher panel co-integration techniques are applied to analyse the co-integration relationship between the variables while the Vector Error Correction Model (VECM) Granger-causality test is used to estimate the causality relationship among the variables. The study’s results reveal that there is a long run relationship between the variables. The research outcome further detected a unidirectional causality flowing from economic growth to electricity consumption in the long run in Brics countries. So in the light of determination of the study, the policy implication is that a significant transformation of low carbon technologies such as renewable energy should be implemented to curb the emissions and sustain economic growth and development.

• Item Type: MPRA Paper
• English Title: Dr
• Language: English
• Keywords: Energy consumption; Economic growth; Causality; Brics countries
• Subjects: D - Microeconomics > D0 - General > D04 - Microeconomic Policy: Formulation, Implementation, and Evaluation; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q2 - Renewable Resources and Conservation; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q43 - Energy and the Macroeconomy; Z - Other Special Topics > Z0 - General > Z00 - General

References

Adebola S.S. & Shahbaz M, (2013), “Trivariate causality between economic growth, urbanisation and electricity consumption in Angola: Co-integration and causality analysis”, Journal of Energy Policy 60, 876-884.

Ahmad M.G & Islam M,N, (2011), “Electricity consumption and economic growth nexus in Bangladesh: Revisited evidences”, Journal of Energy Policy, 39,6145-6150

Alam A, (2013), “Electric power consumption, foreign direct investments and economic growth: A comparative study of India and Pakistan”, World Journal of Science, Technology & Sustainable Development. 10(1),55-65.

Apergis N. & Payne J.E, (2011), “A dynamic panel study of economic development and electricity consumption-growth nexus”, Journal of Energy Economics, 33,770-781.

Bildirici M. Bakirtas T. & Kayikci F, (2012), “Economic growth and electricity consumption: Auto regressive distributed lag analysis”, Journal of Energy in Southern Africa, 50(4), 29-45.

Chen S. Kuo H. & Chen C, (2007), “The relationship between GDP and electricity consumption in 10 Asian countries”, Energy Policy, 35(4),2611-2621

Danaraya I.A. & Hassan S. (2016), “Electricity consumption and manufacturing productivity in Nigeria: An Autoregressive Distributed lag-bounds Testing Approach”, International Journal of Energy Economics and Policy, 6(2),195-201.

Enerdata. (2014) world energy consumption: China and Brics slow, while the USA restarts. [Online]. Available: https://www.enerdata.net/publications/executive-briefing/world-energy-consumption-china-and-brics-slow-while-usa-restart.html. [Accessed 20 July 2017].

Gurgal H. & Lach L, (2012), “Electricity consumption versus economic growth of the Polish economy”, Energy Economics, 34,500-510.

Jamil F. & Ahmed P, (2010), “The relationship between electricity consumption, electricity prices and GDP in Pakistan”, Energy Policy, 38,6016-6025.

Khobai H. Mugano G. and Le Roux, (2017), “The impact of electricity price on economic growth in South Africa”, International Journal of Energy Economics and Policy, 7(1), 108 – 116.

Khobai H.B. and Le Roux P. (2017), “The Relationship between Energy Consumption, Economic Growth and Carbon Dioxide Emission: The Case of South Africa”, International Journal of Energy Economics and Policy, 7(3), 102-109.

Kouakou A (2011), “Economic growth and electricity consumption in Cote d’Voire: Evidence from time series analysis”, Energy Policy, 39, 3638- 3644

Masuduzzaman M, (2013), “Electricity consumption and economic growth in Bangladesh: Co-integration and Causality Analysis”, Research Study Series, No.-FDRS 02/2013.

Mozumder P. & Marathe A, (2007), “Causality relationship between electricity consumption and GDP in Bangladesh”, Energy Policy, 35,395-402

Narayan P.K. & Prasad A, (2008), “Electricity consumption - real GDP causality nexus: Evidence from bootstrapped causality test for 30 OECD countries”, Energy Policy, 36,910-918.

Shahbaz M. & Lean H.H, (2012), “The dynamics of electricity consumption and economic: A revisit study of their causality in Pakistan”, Journal of Energy Economics, 39,146-153.

Shahbaz M. Tang C.F. & Shabbir M.S, (2011). Electricity consumption and economic growth nexus in Portugal using co-integration and causality approaches. Journal of Energy Policy, 39,3529-35-36.

Wen-Cheng L, (2016), “Electricity consumption and economic growth: Evidence from Taiwanese Industries”, Sustainability, 9(50),1-15.

Yuan J. Zhao C. Yu S. & Hu Z, (2007), “Electricity consumption and economic growth in China: Co-integration and co-feature analysis”, Journal of Energy Economics, 29, 1179-1191

Yoo S. & Kwak S, (2010), “Electricity consumption and economic growth in seven South American countries”, Journal of Energy Policy, 38,181-188.