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Electricity Consumption and Economic Growth in South Asia

Author

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  • Syed Ali Raza
  • Syed Tehseen Jawaid
  • Mohammad Haris Siddiqui

Abstract

This study investigates the effect of electricity consumption on economic growth of four South Asian countries, namely, Pakistan, India, Bangladesh and Sri Lanka, by employing time series annual data from 1980 to 2010. Pedroni’s panel cointegration results confirm that there exists valid long-run relationship between electricity consumption and economic growth in South Asia. Results of random effects model suggest the positive and significant impact of electricity consumption on economic growth of South Asian countries. Robustness of the initial findings of positive and significant relationship is confirmed by four different sensitivity analyses. Results of panel Granger causality test confirm the unidirectional causal relationship runs from electricity consumption to economic growth. It is therefore recommended that the South Asian countries should consider the development initiative and low-cost mode to produce electricity to enhance economic growth in the region.

Suggested Citation

  • Syed Ali Raza & Syed Tehseen Jawaid & Mohammad Haris Siddiqui, 2016. "Electricity Consumption and Economic Growth in South Asia," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 17(2), pages 200-215, September.
    • Handle: RePEc:sae:soueco:v:17:y:2016:i:2:p:200-215
    DOI: 10.1177/1391561416649721
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    More about this item

    Keywords

    Energy; economic growth; panel data; South Asia;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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