The importance of non-renewable, renewable and sustainable energy sources and energyconsumption in the economic development strategy of a country is undeniable. The purpose of the paper is to investigate the impacts of energyconsumption on the economicgrowth of Vietnam during the 1980-2014 period. By applying the Autoregressive Distributed Lag (ARDL) model of Pesaran et al. (2001), and the Granger causality test of Toda and Yamamoto (1995), the empirical results provide evidence that electricity consumption has positive impacts on Vietnam’s economicgrowth in both the short run and long run. For public policy prescriptions, the empirical evidence suggests that an exploration of new sources of renewable and sustainable energy is essential for long run economic development.
This paper contributes to the existing voluminous research on energy and growth providing a dynamic and comprehensive effect of investing in clean energy and it consequences on economicgrowth employing the ADRL modus operandi to co-integration to estimate the reality of co-integrating among the series in the long run. The analytical tests were realized utilizing the maximum lags explicitly chosen by estimating the series at level and confirming the stability of the unrestricted VAR model. The result establishes co-integration among the variables in the long run finding an inverse relationship between alternative and nuclear energyconsumption and economicgrowth. The other indicator of clean energy that is electricity power consumption indicates a positive significant relationship with economicgrowth. Further we conclude that there is a bidirectional causal relationship between these two indicators and economicgrowth in the long run. This endorses the prospective benefit of Vietnam to invest in clean energy.
With the advent of globalization and industrialization, the life of human being has become luxurious, efficient and comfortable but at the same time, the economies are facing the challenge of environmental degradation. Environmental degradation has become the significant problem around the world and increasing day by day. Amongst many, the key reasons of this environmental degradation are the financial development and energyconsumption. The purpose of this study is to examine the impact of financial development, economicgrowth and energyconsumption on environmental degradation in Pakistan. We construct financial development index for Pakistan by applying principle component method on the major four proxies of financial development available in literature namely; domestic credit by banking sector, domestic credit to private sector, stock market capitalization, and liquid liabilities. The unit root test, co-integration test, and ordinary least square analyses have been applied on the historical data over the period of 1972- 2014. The empirical evidence shows that all the variables have a significant positive effect on environmental degradation which means an increase in any variable will increase the environmental degradation. This study will be beneficial for the strategy makers and government of Pakistan in the formulation of eco-friendly strategies.
The causal relationship between energyconsumption and economicgrowth has been examined extensively in a number of countries in recent years, with conflicting results. Three views exist regarding the relationship between energyconsumption and economicgrowth. The first view, which posits that energyconsumption Granger-causes economicgrowth, has been supported by studies like those of Chang et al. (2001) for the case of Taiwan; Wolde-Rufael (2004) for Shanghai; Lee (2005) for the case of developing countries; Altinay and Karagol (2005) for Turkey; Chiou-Wei et al. (2008) for Taiwan, Hong Kong, Malaysia and Indonesia; Akinlo (2009) for Nigeria; Odhiambo (2009a) for Tanzania; Odhiambo (2010) for the case of South Africa and Kenya; Chu (2012) for the case of 13 countries; Dergiades et al. (2013) for Greece; Muhammad et al. (2013) for Pakistan; Odhiambo (2014) for the case of Uruguay and Brazil; Abosedra et al. (2015) for Lebanon; Iyke (2015) for Nigeria; Tang et al. (2016) for Vietnam; Rahman (2017) for the case of Asian populous countries; Saidi et al. (2017) for the case of the European countries; Cai et al. (2018) for the case of Canada, Germany and the US; Le and Quah (2018) for the case of 14 selected countries in the Asia and the Pacific region; Bekun et al. (2019) for South Africa; and more recently Rahman et al. (2020) for the case of China when coal and oil consumption are used as proxies for energyconsumption.
This study investigated the relationship between economicgrowth, and energyconsumption in Malaysia using annual time series data for the period of 1976 – 2014. ARDL cointegration method developed by Shin et al. (2014) was applied and we tested the causal relationship between the variables using VECM, VDCs and IRF tests. The empirical results provide evidence that the variables are asymmetrically cointegrated. The finding of this study is crucial as it suggests that a change in the energyconsumption will affect the economicgrowth in Malaysia and the impact of a reduction in energyconsumption will have a larger effect compared to an increase in energyconsumption. Policymakers in Malaysia can influence the economicgrowth in Malaysia by controlling the energyconsumption of the nation. Government incentives in encouraging energy saving behavior and development of alternate source of energy can lead to sustained economicgrowth without impacting the production level of the nation.
The empirical evidence suggests that renewable and non-renewable energyconsumption stimulate economicgrowth in OECD countries. However, comparing the magnitudes of their coefficients confirms that non-renewables are still the dominant type of energy utilised in the process of economicgrowth. Similar results are obtained for industrial output, indicating that although the share of the use of non- renewable energy is declining compared with the share of renewable sources, non- renewables still play a considerable role in industrial production in developed countries today. The results also indicate that while oil and natural gas consumption positively and significantly influence economicgrowth, no significant relationship is observed between coal consumption and economicgrowth. It seems to be due to emerging policies that try to curb pollutant emissions by imposing a cost on higher- carbon fuels that in turn results in declined demand for coal in developed countries. In contrast, even though policies seek to slow consumptiongrowth of oil, it is still the dominant fuel particularly in the transport sector. According to the EIA, since developed countries tend to have higher vehicle ownership per capita, oil consumption within the OECD transportation sector usually accounts for a larger share of total oil consumption than in non-OECD countries. In addition, oil is used in many ways, from the manufacture of goods, to transport of goods and people, to food production, to operating construction equipment, to mining. Therefore, it seems not to be achievable to substitute oil for clean energy in the near future. However, natural gas, which has the second position after oil, has an important feature in that it generates less carbon emissions compared with the other fossil fuels. Thus, fuel transformation at least from coal and/or oil to natural gas should be taken into account by policymakers.
In the literature, there are several studies, theoretical and empirical, which put the accent on the relationship between energyconsumption, economicgrowth, and the emission of CO2 that may ex- ist. Empirically it has been tried to find the direction of causality between energyconsumption and economic activities for some countries employing the Granger Test, ECM and other techniques. In recent papers, Zhang and Lin (2012) chowed that urbanization increases energyconsumption and CO2 emissions in China using panel estimation. They proves that the effects of urbanization on en- ergy consumption vary across regions and decline continuously from the western region to the central and eastern regions. Shyamal and Rabindra (2004) examined the different direction of causal rela- tion between energyconsumption and economicgrowth in India through a co-integration technique combined with the Granger causality test. They find the existence of a bi-directional causality be- tween energyconsumption and economicgrowth. Wang et al. (2016) used a co-integration approach in China data to examine the relation between economicgrowth, energyconsumption and CO2 emis- sion. Granger causality test identified a bi-directional causal relationship between economicgrowth and energyconsumption, and a uni-directional causal relationship was found to exist fromenergyconsumption to CO2 emissions. Saidi and Hammami (2015) studied the impact of energy consump- tion and CO2 emission on economicgrowth for 58 countries. They have used simultaneous equations models estimated by the GMM-estimator and they find evidence that energyconsumption has a pos- itive impact on economicgrowth and that the CO2 emissions have a negative impact on economicgrowth.
This paper aims at determining the relationship between economicgrowth and energyconsumption in Jordan within the neo-classical productivity theory framework where capital, labour and energy are treated as separate production factors. It constructs an econometric model using annual time series data covering the period 1970– 2011. After estimating the parameters of the model, it uses causality tests to examine the existence and direction of causality between output growth and production factors including energyconsumption. Empirical findings suggest that there exists Granger causality running from GDP to energyconsumption, but there is no Granger causality running fromenergyconsumption to GDP. The implication being that energy supply constraints could be introduced with little or no impact on economicgrowth. This unidirectional causality provides empirical evidence that Jordan is a less energy-dependent economy. Such findings undermine the theory of energy conservation policies and support the Government policies that aim at raising the prices of energy and reducing public demand for energyconsumption mainly to reduce the deficit of government budget, foreign debt, and its services.
eight Asian countries and United States. The findings indicate that a non-linear causal nexus between energyconsumption and output is valid in the case of Taiwan, Hong Kong, Singapore, Indonesia and Philippines; whereas, in the pattern of United States, South Korea and Thailand there is no supportive evidence for causality. Other studies examine nonlinear Granger causality tests include Ajmi, Montasser & Nguyen (2013) and Dergiades, Martinopoulos & Tsoulfidis (2013). However, Ciarreta and Zarrage (2007) found no evidence of nonlinear Granger causality between the series in either direction when computed both linear and nonlinear causality between energyconsumption and economicgrowth in Spain from 1971- 2005. But, they found unidirectional linear causality running from GDP to energyconsumption. Thus, this paper aims at narrowing the gap between the literature and practice by reconsidering the relationship between energyconsumption and economicgrowth in the particularly interesting case of Thailand.
Table 7 reported that the sign of ECT (-0.07) coefficient is significant and negative, in line with the a priori expectation. This validates that there is a long run causality flowing from renewable energyconsumption, carbon dioxide emissions, trade openness and capital formation to economicgrowth. The long run results further suggested a long run causality flowing fromeconomicgrowth, renewable energyconsumption, trade openness and capital formation to carbon dioxide emissions. This is because the coefficient of the lagged error term (-0.118) was found to be negative and significant. The existence of a long run causality flowing from renewable energyconsumption to economicgrowth suggest that the energy policies such as energy conservation cannot be applied in the long run as this will have adverse effect economicgrowth. It agrees with the studies conducted by Omri, Mabrouk and Sassi-Tmar (2015) for Hungary, India, Japan, Netherlands, and Sweden
According to the recent World Bank (2012) report, the most commercially established renewable energy resource is the hydropower. This resource has been used to generate hydroelectricity. Traditionally this electricity power is generated along rivers by the force of flowing water and it remains the largest global renewable energy source. At present, hydropower supplies less than 2.5 % of the MENA region’s electricity. The greatest technical potential for hydro development in the region can be found in Egypt, the Islamic Republic of Iran, and Iraq. Throughout the rest of the region, water scarcity cause serious problems in front of the hydroelectric for development potential. On the basis of the combined country- specific potential, if the countries exploit known hydropower resources using current technologies, the electricity will approximately generate 182.1 TWh per year (Table.1.B). The amount of this strategy can cover nearly 16 % of current electricity supplies in the region.
Economicgrowth has a positive and significant impact on carbon emissions both in the long and short run. In the long-run, a 1% increase in per capita GDP will increase per capita carbon emissions by 0.451, 0.290 and 0.513 in Algeria, Egypt and South Africa, respectively. This finding is in line with Lin et al. , Liu et al. , and Chen and Lei  whose studies do not include a quadratic term of per capita GDP in their environmental impact model. However, the elas- ticity of carbon emissions with respect to income is lower than the value ob- tained by the above-mentioned authors. This result could be explained by the structure or composition of production in these countries. In fact, structural transformation in these countries is accompanied by a shift from the industrial to the service sector, which is generally considered as less pollutant intensive, than the industrial sector .
The data for the variables such as economicgrowth, capital and employment have been sourced from World Development Indicator while renewable energyconsumption and carbon dioxide emissions were sourced from International Energy Agency (IEA). The data set comprises of observations for economicgrowth proxies by gross domestic product measured in millions of 2010 constant US dollars and renewable energyconsumption, which is measured in million kilowatt- hours. Additional variables include, carbon dioxide emissions measured in metric tones, capital proxies by gross fixed capital formation and employment proxies by commercial, agricultural and manufacturing employments. The data used in this study covers a period between 1990 and 2014 and its extrapolated into quarterly data.
Vietnam has had a remarkable achievement in the reduction in poverty. The poverty headcount ratio has decreased and GDP per capita has increased steadily over the last two decades (Table 3). As a result of the Doi Moi reforms, poverty dropped remarkably from 58 per cent in 1993 to 37 per cent in 1998. The growth elasticity of poverty for this period is -0.95; that is, holding other factors constant, for every 1 per cent increase in GDP per capita, poverty falls by 0.95 per cent on average. The elasticity peaks at -2.5 per cent in 2004, and then tends to decline. This trend is consistent with the process of economic development in Vietnam. In the early 2000s, the economy was relatively stable with low inflation. Moreover, economic reforms had been accelerating to prepare for joining the World Trade Organisation (WTO). Therefore, income growth benefits the poor and contributes to the reduction in poverty. In the later stages, the 2008 financial crisis and increasing inflation may have offset the benefits of economicgrowth to the poor.
The results regarding long-term relationship between the variables are shown in Table 5. The coefficient of FDI inflows is positive and statistically significant, indicating that FDI has a positive effect on economicgrowth. It also reveals that the 1% rise in inward FDI tends to increase 0.24% in GDP growth rate. This result is consistent with the proponent of the FDI-led growth hypothesis such as Borensztein et al. (1998), Lean and Tan (2011), Insah (2013) and Iqbal and Abbas (2015). FDI has been an essential source that directly supported the creation of various industrial sectors in Vietnam with high demands for technology and value- added products, such as machinery manufacturing, energy, computers and telephones. In addition, FDI has played an increasingly important role in the country’s export and import activities as well as ensured the supply of foreign exchanges and national balance of payments during the past years.
As for the interaction between financial development and economicgrowth, the results show that taking asymmetry into account is important. Indeed, a positive shock in financial development does not affect economicgrowth, but a negative shock in financial development hampers domestic economic output. For instance, the recent Financial Stability Report (2016) of the Reserve Bank of India (RBI) reveals increasing non-performing assets (NPAs) or bad loans mainly in the Indian public sector and scheduled commercial banks. This report shows that both the public sector and scheduled commercial banks have imprudently lent large sums of money to large corporations 21 without evaluating their creditworthiness (Ranjan and Dhal, 2003). 22 Eventually, these banks reported losses due to the payment failures of large corporations in India. The greater losses in these banks not only harm their balance sheets due to unrealistic lending practices in relation to large corporations but also adversely affect Indian macroeconomic performance as a whole. In such circumstances, we hint that the monetary policy committee (MPC) in India should direct both the public sector and scheduled commercials banks to advance their credit allocation only towards productive sectors by tightening credit provisioning rules for the bad loans that they generated in the economy. If such a policy continues in right direction, then the credit expansion of these banks in an ethical monetary policy framework will be unlikely to undermine India’s economicgrowth in the long run. From a policy perspective, this result further suggests that policymakers in India should carefully check the proper allocation of financial resources across various competing consumption and business activities to minimize
Panel data analysis is a method of studying multiple phenomena observed over multiple time periods for the same individuals. It can reveal changes in laws and individual characteristics on the basis of the total information available for a sample. Following established procedures, we conduct the test of the dynamic causal relationship between economicgrowth, energyconsumption, capital formation, labor force, and energy price. The testing procedure involves the following steps. At the first step, we test whether each variable contains a panel unit root. And if a unit root exists, a panel co-integration relationship among variables is tested to examine the long-run relationship. If a long-run relationship is found, we then estimate a panel vector error correction (VEC) model to infer the Granger causal relationship among variables, and examine the short-run relationship. Finally, we mainly focus on the dynamic relationship among variables. A panel VAR model is estimated using system GMM method, and then an orthogonalized impulse response functions is estimated to derive the impact of shocks among variables and the relative contributions by variance decompositions. In this paper, we adopt the software Stata and EViews for empirical analysis.
Despite the burgeoning volume of literature on the causal relationship between energyconsumption and economicgrowth, no attempt has being made to quantify the direction of causality between energyconsumption and economicgrowth for any regional economic community in Africa. The few causality studies that have been conducted are based on individual countries and use time series data. Results from these studies have been mixed, mainly because of the different econometric methods used. Jumbe (2004) examined the causality relationship between GDP and per capita consumption of electricity for Malawi and found a bidirectional relationship. Wolde-Rufael (2006) investigated the long-run relationship between energy use per capita and per capita real GDP for 19 African countries and found mixed results, ranging from negative causality to bidirectional causality.
Chaudhary, Safdar and Farooq (2012) examined the relationship between economicgrowth and energyconsumption in case of Pakistan by taking annual data for the period of 1972 to 2012, Study argued that demand for energy is growing quickly in the world and most of the economies are facing energy shortfall and as a result it is harshly affecting the economicgrowth of the countries. In case of Pakistan investment in the energy sector is insufficient and majority of commercial energy infrastructure is still underdeveloped and there are lots of ﬂaws in the demand and supply side especially relating to payments of energy sector. The result indicates that the utilization of electricity is signiﬁcantly enhancing economicgrowth among other sources of energy and because of high volume of imports oil consumption is also adversely affecting economicgrowth. This study has policy point there should be shift from expensive resources of energy like oil to cheap resources of energy like coal and Gas and government should make short run as well as long term plans to produce low price energy domestically.
The relationship between energyconsumption and economicgrowth has been one of the most investigated yet controversial issues in the energy economics literature since the seminal work of Kraft and Kraft (1978). The interest of energy economists on this issue gained a new momentum with increasing concerns about global warming, especially after adoption of the Kyoto Protocol in 1997 that entered into force in 2005. Industrialized member countries committed themselves to a reduction of greenhouse gas emission, mainly by restricting fossil fuel consumption. However, since energy is considered as an essential factor of production by many energy economists (e.g., Stern, 2000; Oh and Lee, 2004; Ghali and El-Sakka, 2004, Beaudreau, 2005, Lee and Chang, 2008), it is argued that reducing energyconsumption may hamper economicgrowth and hence increase unemployment. On the other hand, the proponents of the so-called “conservation hypothesis” argue that the positive relationship between energyconsumption and output level stems from positive effects of output growth rate on energyconsumption, and hence policies aimed at conserving energyconsumption will have only a limited, if any, adverse effect on economicgrowth. Similarly, supporters of the “neutrality hypothesis” argue that energyconsumption and output level are not correlated, and therefore neither energy conservation nor energy promoting policies will affect economicgrowth of countries (see, for example, Lee and Chang, 2008; Apergis and Payne, 2009; Ozturk, 2010). Taking account of these alternative views regarding the relationship between energyconsumption and output level, it is evident that discovering the causal linkages between energyconsumption and economicgrowth is vital in designing energy policies for each nation.