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Energy Consumption, Economic Growth and Financial Development: A Comparative Perspective on India and China

Author

Listed:
  • Hrushikesh Mallick

    (Centre for Development Studies (CDS), Kerala, India)

  • Mantu Kumar Mahalik

    (Amritapuri Campus, Amrita Vishwa Vidyapeetham University, India)

Abstract

The study empirically explores the relationships among energy use, economic growth and financial development for India and China on annual data for 1971 -2011. Using Auto Regressive Distributed Lag (ARDL) approach to cointegration model, it suggests that energy consumption is positively influenced by proportion of urban population, while it is negatively influenced by financial development, economic growth and proportion of industrial output in both the economies. The results also further suggest that urbanization adversely influences economic growth, whereas energy use positively influences growth for India. In contrast, while financial development, energy use and industrial output adversely influence the growth, the urbanization favorably influences the same for China. The finding for China is quite contrary to the common belief that the performance of industrial sector is the key success for achieving higher growth.

Suggested Citation

  • Hrushikesh Mallick & Mantu Kumar Mahalik, 2014. "Energy Consumption, Economic Growth and Financial Development: A Comparative Perspective on India and China," Bulletin of Energy Economics (BEE), The Economics and Social Development Organization (TESDO), vol. 2(3), pages 72-84, September.
  • Handle: RePEc:ijr:beejor:v:2:y:2014:i:3:p:72-84
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    Citations

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    Cited by:

    1. repec:eee:eneeco:v:63:y:2017:i:c:p:199-212 is not listed on IDEAS
    2. Shahbaz, Muhammad & Mallick, Hrushikesh & Mahalik, Mantu Kumar & Sadorsky, Perry, 2016. "The role of globalization on the recent evolution of energy demand in India: Implications for sustainable development," Energy Economics, Elsevier, vol. 55(C), pages 52-68.
    3. Shahbaz, Muhammad & Hoang, Thi Hong Van & Mahalik, Mantu Kumar & Roubaud, David, 2017. "Energy consumption, financial development and economic growth in India: New evidence from a nonlinear and asymmetric analysis," Energy Economics, Elsevier, vol. 63(C), pages 199-212.
    4. repec:eee:rensus:v:75:y:2017:i:c:p:1022-1034 is not listed on IDEAS
    5. repec:eee:enepol:v:125:y:2019:i:c:p:405-417 is not listed on IDEAS
    6. Mahalik, Mantu Kumar & Babu, M. Suresh & Loganathan, Nanthakumar & Shahbaz, Muhammad, 2017. "Does financial development intensify energy consumption in Saudi Arabia?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 1022-1034.
    7. Aslan Alper & Gozbasi Onur, 2016. "Environmental Kuznets curve hypothesis for sub-elements of the carbon emissions in China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 82(2), pages 1327-1340, June.
    8. Shahbaz, Muhammad & Mallick, Hrushikesh & Kumar, Mantu & Loganathan, Nanthakumar, 2015. "Does Globalization Impede Environmental Quality in India?," MPRA Paper 67285, University Library of Munich, Germany, revised 15 Oct 2015.
    9. Noh, Nadia Mohd & Masih, Mansur, 2017. "The relationship between energy consumption and economic growth: evidence from Thailand based on NARDL and causality approaches," MPRA Paper 86384, University Library of Munich, Germany.
    10. repec:eee:enepol:v:110:y:2017:i:c:p:588-599 is not listed on IDEAS
    11. Keho, Yaya, 2016. "What drives energy consumption in developing countries? The experience of selected African countries," Energy Policy, Elsevier, vol. 91(C), pages 233-246.
    12. Shahbaz, Muhammad & Benkraiem, Ramzi & Miloudi, Anthony & Lahiani, Amine, 2017. "Production function with electricity consumption and policy implications in Portugal," Energy Policy, Elsevier, vol. 110(C), pages 588-599.
    13. repec:eee:energy:v:128:y:2017:i:c:p:487-495 is not listed on IDEAS
    14. Khobai, Hlalefang & Abel, Sanderson & Le Roux, Pierre, 2017. "A Review of the Nexus Between Energy consumption and Economic growth in the Brics countries," MPRA Paper 82462, University Library of Munich, Germany.
    15. Benkraiem, Ramzi & Lahiani, Amine & Miloudi, Anthony & Shahbaz, Muhammad, 2019. "The asymmetric role of shadow economy in the energy-growth nexus in Bolivia," Energy Policy, Elsevier, vol. 125(C), pages 405-417.
    16. Roubaud, David & Shahbaz, Muhammad, 2018. "Financial Development, Economic Growth, and Electricity Demand: A Sector Analysis of an Emerging Economy," MPRA Paper 87212, University Library of Munich, Germany, revised 06 Jun 2018.
    17. repec:gam:jeners:v:11:y:2018:i:6:p:1536-:d:152205 is not listed on IDEAS
    18. Hlalefang Khobai & Sanderson Abel & Pierre Le Roux, 2016. "Co-integration between Electricity Supply and Economic Growth in South Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 6(3), pages 637-645.
    19. Ramachandra, T.V. & Bajpai, Vishnu & Kulkarni, Gouri & Aithal, Bharath H. & Han, Sun Sheng, 2017. "Economic disparity and CO2 emissions: The domestic energy sector in Greater Bangalore, India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 1331-1344.

    More about this item

    Keywords

    Energy use; Urbanization; Financial development; Economic growth;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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