On SAGE Insight: Electricity Consumption and Economic Growth in South Asia


From South Asia Economic Journal

The importance of relationship between energy consumption and economic growth can be seen in the literature in which it has widely been discussed. Energy consumption is directly affected by individual consumption as well as industrial growth. In a globalized world, the demand for electricity has been increasing rapidly, and the dependency of countries on electricity highlights the most important problem for the next century.

This article investigates the effect of electricity consumption on economic growth in four South Asian countries, namely Pakistan, India, Bangladesh and Sri Lanka, by employing long annual data from 1980 to 2010. Pedroni’s panel cointegration results confirm that there exists valid long-run relationship between electricity consumption and economic growth in South Asia. It is therefore recommended that the South Asian countries should consider development initiative and low-cost mode to produce electricity to enhance economic growth in the region.

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Abstract

This study investigates the effect of electricity consumption on economic growth of four South Asian countries, namely, Pakistan, India, Bangladesh and Sri Lanka, by employing time series annual data from 1980 to 2010. Pedroni’s panel cointegration results confirm that there exists valid long-run relationship between electricity consumption and economic growth in South Asia. Results of random effects model suggest the positive and significant impact of electricity consumption on economic growth of South Asian countries. Robustness of the initial findings of positive and significant relationship is confirmed by four different sensitivity analyses. Results of panel Granger causality test confirm the unidirectional causal relationship runs from electricity consumption to economic growth. It is therefore recommended that the South Asian countries should consider the development initiative and low-cost mode to produce electricity to enhance economic growth in the region.

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Article details
Syed Ali Raza, Syed Tehseen Jawaid, and Mohammad Haris Siddiqui
Electricity Consumption and Economic Growth in South Asia
South Asia Economic Journal September 2016 17: 200-215, first published on July 22, 2016 doi:10.1177/1391561416649721

 

 

     
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