Electricity consumption and economic growth : New evidence from advanced, emerging and developing economies

Abstract

Purpose

This paper aims to examine the short- and long-run relationship between electricity consumption and economic growth.

Design/methodology/approach

The study uses a panel-based autoregressive distributed lag approach to cointegration to investigate this relationship in 12 advanced, emerging markets and developing economies during the period 1970-2016, selected from three continents, namely, Europe (Luxemborg, Norway, Denmark and Belgium), Asia (Singapore, Japan, Indonesia and India) and Africa (South Africa, Algeria, Egypt and Kenya).

Findings

Based on the homogeneity assumption, the study results reveal that electricity consumption is positively and significantly associated with economic growth in all the study countries in the long run. Conversely, the short-run results reveal that electricity consumption is positively and significantly associated with economic growth in ten countries and negatively associated with economic growth in only two countries.

Research limitations/implications

The study concludes that, on the whole, electricity consumption is an important factor of production in the majority of the study countries. Therefore, policymakers should focus on growth-enhancing energy policies that promote energy efficiency usage, especially in the long run.

Originality/value

The authors hereby confirm that the paper has not been published elsewhere, and this research is entirely their work.

Citation

Chirwa, T.G. and Odhiambo, N.M. (2020), "Electricity consumption and economic growth : New evidence from advanced, emerging and developing economies", International Journal of Energy Sector Management, Vol. 14 No. 1, pp. 1-19. https://doi.org/10.1108/IJESM-11-2018-0014