The relationship between energy consumption and GDP in emerging countries

Abstract

Purpose

This paper aims to investigate the relationship between gross domestic product (GDP) by sector and energy consumption by type in 16 emerging countries.

Design/methodology/approach

The panel model was utilized taking the period 1980-2010.

Findings

The results revealed that GDP by sector and energy consumption by type are cointegrated. Moreover, the Granger causality concluded a bi-directional causal relationship between oil, natural gas and renewable energy consumption and the value of the manufacturing, industrial and services sector. Furthermore, a bi-directional causal relationship was also found between coal consumption and the value of the services sector. Furthermore, a one-way causal relationship was found from oil consumption to the value of the agriculture sector, the value of the agriculture sector to coal consumption, and coal consumption to the value of the manufacturing and the industrial sectors.

Practical implications

This study recommended that these countries should increase their renewable energy consumption to achieve their GDP growth.

Originality/value

This study is different from the previous studies, as it disaggregated the GDP into four sectors, namely, agriculture, manufacturing, industrial and the services sector. In addition, this study will disaggregate energy consumption into oil consumption, gas consumption, coal consumption and electricity consumption.

Citation

Al-mulali, U. and Mohammed, A.H. (2015), "The relationship between energy consumption and GDP in emerging countries", International Journal of Energy Sector Management, Vol. 9 No. 1, pp. 77-93. https://doi.org/10.1108/IJESM-04-2013-0006