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How technological innovation and institutional quality affect sectoral energy consumption in Pakistan? Fresh policy insights from novel econometric approach

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Listed:
  • Zheng, Li
  • Abbasi, Kashif Raza
  • Salem, Sultan
  • Irfan, Muhammad
  • Alvarado, Rafael
  • Lv, Kangjuan

Abstract

Pakistan's energy issue remains an impediment to economic sectors facing significant obstacles in eliminating the energy demand-supply gap. Macroeconomic experts are looking for more suitable and inventive ways to construct a sustainable energy framework. The study inspects ten control factors, including household consumption expenditure, other electricity consumption, industrial value-added, urbanization population growth, agricultural value-added, arable land, rainfall pattern, public-private partnership, technological innovation, and institutional quality, to explore the electricity consumption of agricultural, commercial, industrial, and residential sectors from 1980 to 2019. We applied a novel dynamic ARDL simulation method, Cumulative Fourier Frequency Domain Causality, and structural break estimation approach. The findings reveal that agricultural, commercial, and industrial sectors have a greater influence on energy than residential sector determinants. More specifically, a 1 % increase in technological innovation in the commercial sector increases energy consumption by 0.029 and 0.141 % in the short and long-run, respectively. Additionally, a 1 % upsurge in the industrial sector's technological innovation coefficient indicates a short-run drop of 0.043 % and a long-run rise of 0.097 %. It implies that technological progress increases sectoral energy efficiency and is also environmentally friendly. While public-private partnerships are beneficial to the country's commercial activities, increasing institutional performance can enhance the productivity of the industrial sector. Also, household consumption and expenditure greatly impacted the residential sector. The findings suggest that understanding energy governance and policy methods is important to resolve equitable energy infrastructure challenges in Pakistan.

Suggested Citation

  • Zheng, Li & Abbasi, Kashif Raza & Salem, Sultan & Irfan, Muhammad & Alvarado, Rafael & Lv, Kangjuan, 2022. "How technological innovation and institutional quality affect sectoral energy consumption in Pakistan? Fresh policy insights from novel econometric approach," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    • Handle: RePEc:eee:tefoso:v:183:y:2022:i:c:s0040162522004231
    DOI: 10.1016/j.techfore.2022.121900
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