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Electricity Consumption and Economic Growth: Evidence from South Asian Countries

Author

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  • Sebastian Majewski

    (Department of Sustainable Finance and Capital Markets, Institute of Economics and Finance, University of Szczecin, 71-101 Szczecin, Poland)

  • Urszula Mentel

    (Department of Projects Management and Security Policy, Faculty of Management, Rzeszow University of Technology, 35-959 Rzeszow, Poland)

  • Raufhon Salahodjaev

    (Department of Mathematical Analysis, Tashkent State University of Economics, 49 O’zbekiston Shoh Ko’chasi, Tashkent 100066, Uzbekistan)

  • Marek Cierpiał-Wolan

    (Department of Quantitative Methods and Economic Informatics, Institute of Economics and Finance, University of Rzeszów, Statistical Office in Rzeszów, 35-959 Rzeszow, Poland)

Abstract

The purpose of this study is to shed light on the nexus between electricity supply and economic growth in South Asian countries during 1990–2018. The study employs Pedroni’s panel cointegration test as well as Dumitrescu and Hurlin’s (DH) causality test for panel data. The empirical results confirm a long-term relationship between electricity supply and economic growth. We fail to reject the non-causal relationship between electricity supply and economic growth for the panel, thereby affirming the neutrality hypothesis. Single country causality analysis reveals the growth hypothesis in the case of Pakistan. These results have a number of policy implications. For example, governments can introduce measures to improve energy efficiency in Bangladesh, India and Sri Lanka without fear of harming economic growth. The results for Pakistan may also imply that fostering green energy generation would lead to a positive effect on economic growth via improved electricity production. The government may use various policy tools to stimulate adoption of renewable energy, such as fiscal incentives, low interest loans, or grants for rural populations to speed up the green energy transformation.

Suggested Citation

  • Sebastian Majewski & Urszula Mentel & Raufhon Salahodjaev & Marek Cierpiał-Wolan, 2022. "Electricity Consumption and Economic Growth: Evidence from South Asian Countries," Energies, MDPI, vol. 15(4), pages 1-10, February.
    • Handle: RePEc:gam:jeners:v:15:y:2022:i:4:p:1327-:d:747462
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