IDEAS home Printed from https://ideas.repec.org/a/taf/apeclt/v22y2015i5p349-355.html
   My bibliography  Save this article

Which comes first - urbanization or economic growth? Evidence from heterogeneous panel causality tests

Author

Listed:
  • Brantley Liddle
  • George Messinis

Abstract

Heterogeneous panel causality tests are employed to consider the relationship between urbanization change and economic growth. Urbanization causes economic growth in high-income countries, but noncausality could not be rejected for both middle-income and Latin American countries. A bi-directional, equilibrium relationship is observed for low-income, predominately African countries where economic growth has a positive, causal effect on urbanization, but where urbanization has a negative, causal effect on economic growth. Hence, urbanization and economic growth either co-evolve in low-income/African and high-income countries, or else the two processes are decoupled for middle-income and Latin American countries.

Suggested Citation

  • Brantley Liddle & George Messinis, 2015. "Which comes first - urbanization or economic growth? Evidence from heterogeneous panel causality tests," Applied Economics Letters, Taylor & Francis Journals, vol. 22(5), pages 349-355, March.
    • Handle: RePEc:taf:apeclt:v:22:y:2015:i:5:p:349-355
    DOI: 10.1080/13504851.2014.943877
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13504851.2014.943877
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13504851.2014.943877?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Apergis, Nicholas & Tang, Chor Foon, 2013. "Is the energy-led growth hypothesis valid? New evidence from a sample of 85 countries," Energy Economics, Elsevier, vol. 38(C), pages 24-31.
    2. Liddle, Brantley, 2013. "Urban density and climate change: a STIRPAT analysis using city-level data," Journal of Transport Geography, Elsevier, vol. 28(C), pages 22-29.
    3. Shahbaz, Muhammad & Lean, Hooi Hooi, 2012. "Does financial development increase energy consumption? The role of industrialization and urbanization in Tunisia," Energy Policy, Elsevier, vol. 40(C), pages 473-479.
    4. Jushan Bai & Josep Lluís Carrion-I-Silvestre, 2009. "Structural Changes, Common Stochastic Trends, and Unit Roots in Panel Data," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(2), pages 471-501.
    5. Dumitrescu, Elena-Ivona & Hurlin, Christophe, 2012. "Testing for Granger non-causality in heterogeneous panels," Economic Modelling, Elsevier, vol. 29(4), pages 1450-1460.
    6. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    7. J. Vernon Henderson, 2010. "Cities And Development," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 515-540, February.
    8. Sharif Hossain, Md., 2011. "Panel estimation for CO2 emissions, energy consumption, economic growth, trade openness and urbanization of newly industrialized countries," Energy Policy, Elsevier, vol. 39(11), pages 6991-6999.
    9. Francesca Iorio & Stefano Fachin, 2014. "Savings and investments in the OECD: a panel cointegration study with a new bootstrap test," Empirical Economics, Springer, vol. 46(4), pages 1271-1300, June.
    10. Wheaton, William C & Shishido, Hisanobu, 1981. "Urban Concentration, Agglomeration Economies, and the Level of Economic Development," Economic Development and Cultural Change, University of Chicago Press, vol. 30(1), pages 17-30, October.
    11. Halicioglu, Ferda, 2007. "Residential electricity demand dynamics in Turkey," Energy Economics, Elsevier, vol. 29(2), pages 199-210, March.
    12. Mishra, Vinod & Smyth, Russell & Sharma, Susan, 2009. "The energy-GDP nexus: Evidence from a panel of Pacific Island countries," Resource and Energy Economics, Elsevier, vol. 31(3), pages 210-220, August.
    13. Liddle, Brantley & Lung, Sidney, 2013. "Might electricity consumption cause urbanization instead? Evidence from heterogeneous panel long-run causality tests," MPRA Paper 52333, University Library of Munich, Germany.
    14. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
    15. Henderson, Vernon, 2003. "The Urbanization Process and Economic Growth: The So-What Question," Journal of Economic Growth, Springer, vol. 8(1), pages 47-71, March.
    16. Banerjee, Anindya & Carrion-i-Silvestre, Josep Lluís, 2006. "Cointegration in panel data with breaks and cross-section dependence," Working Paper Series 591, European Central Bank.
    17. Brantley Liddle, 2013. "The Energy, Economic Growth, Urbanization Nexus Across Development: Evidence from Heterogeneous Panel Estimates Robust to Cross-Sectional Dependence," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    18. McCoskey, Suzanne & Kao, Chihwa, 1999. "Testing the Stability of a Production Function with Urbanization as a Shift Factor," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 671-690, Special I.
    19. Michieka, Nyakundi M. & Fletcher, Jerald J., 2012. "An investigation of the role of China's urban population on coal consumption," Energy Policy, Elsevier, vol. 48(C), pages 668-676.
    20. David E. Bloom & David Canning & Günther Fink, 2008. "Urbanization and the Wealth of Nations," PGDA Working Papers 3008, Program on the Global Demography of Aging.
    21. Fay, Marianne & Opal, Charlotte, 2000. "Urbanization without growth : a not-so-uncommon phenomenon," Policy Research Working Paper Series 2412, The World Bank.
    22. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
    23. Suzanne McCoskey & Chihwa Kao, 1999. "Testing the Stability of a Production Function with Urbanization as a Shift Factor," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 671-690, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yabo Zhao & Shaojian Wang, 2015. "The Relationship between Urbanization, Economic Growth and Energy Consumption in China: An Econometric Perspective Analysis," Sustainability, MDPI, vol. 7(5), pages 1-19, May.
    2. Lin Li & Kaixu Zhao & Xinyu Wang & Sidong Zhao & Xingguang Liu & Weiwei Li, 2022. "Spatio-Temporal Evolution and Driving Mechanism of Urbanization in Small Cities: Case Study from Guangxi," Land, MDPI, vol. 11(3), pages 1-34, March.
    3. Maddah, Majid & Ghaffari Nejad, Amir Hossein & Sargolzaei, Mostafa, 2022. "Natural resources, political competition, and economic growth: An empirical evidence from dynamic panel threshold kink analysis in Iranian provinces," Resources Policy, Elsevier, vol. 78(C).
    4. Jamiu Adetola Odugbesan & Husam Rjoub, 2020. "Relationship Among Economic Growth, Energy Consumption, CO2 Emission, and Urbanization: Evidence From MINT Countries," SAGE Open, , vol. 10(2), pages 21582440209, April.
    5. Yifan Wang & Zhongfu Yu & Yamin Hou, 2022. "The Effects of Environmental Regulation and Low-Carbon Logistics Capacity on the Level of New Urbanization in Six Central Provinces of China," Sustainability, MDPI, vol. 14(19), pages 1-20, October.
    6. Tarek Ghazouani, 2022. "The Effect of FDI Inflows, Urbanization, Industrialization, and Technological Innovation on CO2 Emissions: Evidence from Tunisia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(4), pages 3265-3295, December.
    7. Cheng-Yih Hong & Yu-Shuang Yen & Tsai-Rong Lee, 2019. "The Spillover Effects of Investment, Economic Growth and Electricity Consumption: An Application Mathematical Dynamic Industry-Related Models Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 313-319.
    8. Doğan, Buhari & Ferraz, Diogo & Gupta, Monika & Duc Huynh, Toan Luu & Shahzadi, Irum, 2022. "Exploring the effects of import diversification on energy efficiency: Evidence from the OECD economies," Renewable Energy, Elsevier, vol. 189(C), pages 639-650.
    9. Grekou, Carl & Owoundi, Ferdinand, 2020. "Understanding how foreign direct investment inflows impact urbanization in Africa," International Economics, Elsevier, vol. 164(C), pages 48-68.
    10. Rezwanul Hasan Rana & Khorshed Alam & Jeff Gow, 2020. "Health expenditure and gross domestic product: causality analysis by income level," International Journal of Health Economics and Management, Springer, vol. 20(1), pages 55-77, March.
    11. Tomiwa Sunday Adebayo & Abraham Ayobamiji Awosusi & Jamiu Adetola Odugbesan & Gbenga Daniel Akinsola & Wing-Keung Wong & Husam Rjoub, 2021. "Sustainability of Energy-Induced Growth Nexus in Brazil: Do Carbon Emissions and Urbanization Matter?," Sustainability, MDPI, vol. 13(8), pages 1-21, April.
    12. Liddle, Brantley & Sadorsky, Perry, 2017. "How much does increasing non-fossil fuels in electricity generation reduce carbon dioxide emissions?," Applied Energy, Elsevier, vol. 197(C), pages 212-221.
    13. Lars Sorge & Anne Neumann, 2019. "The Impact of Population, Affluence, Technology, and Urbanization on CO2 Emissions across Income Groups," Discussion Papers of DIW Berlin 1812, DIW Berlin, German Institute for Economic Research.
    14. . OLABISI, Olabode E & LAU, Evan, 2018. "Causality Testing between Trade Openness, Foreign Direct Investment and Economic Growth: Fresh Evidence from Sub-Saharan African Countries," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 71(4), pages 437-464.
    15. Sarah Jacobs & Oladipo Olalekan David & Abigail Stiglingh-Van Wyk, 2023. "The Impact of Urbanization on Economic Growth in Gauteng Province, South Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 13(2), pages 1-11, March.
    16. Jha, Amit Prakash & Mahajan, Aarushi & Singh, Sanjay Kumar & Kumar, Piyush, 2022. "Renewable energy proliferation for sustainable development: Role of cross-border electricity trade," Renewable Energy, Elsevier, vol. 201(P1), pages 1189-1199.
    17. Feng Dong & Bolin Yu & Jixiong Zhang, 2018. "What Contributes to Regional Disparities of Energy Consumption in China? Evidence from Quantile Regression-Shapley Decomposition Approach," Sustainability, MDPI, vol. 10(6), pages 1-26, May.
    18. Mohammed Musah & Yusheng Kong & Isaac Adjei Mensah & Stephen Kwadwo Antwi & Mary Donkor, 2021. "The connection between urbanization and carbon emissions: a panel evidence from West Africa," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(8), pages 11525-11552, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liddle, Brantley & Lung, Sidney, 2013. "Might electricity consumption cause urbanization instead? Evidence from heterogeneous panel long-run causality tests," MPRA Paper 52333, University Library of Munich, Germany.
    2. Brantley Liddle, 2013. "The Energy, Economic Growth, Urbanization Nexus Across Development: Evidence from Heterogeneous Panel Estimates Robust to Cross-Sectional Dependence," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    3. Gregori, Tullio & Tiwari, Aviral Kumar, 2020. "Do urbanization, income, and trade affect electricity consumption across Chinese provinces?," Energy Economics, Elsevier, vol. 89(C).
    4. Li, Ke & Lin, Boqiang, 2015. "Impacts of urbanization and industrialization on energy consumption/CO2 emissions: Does the level of development matter?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1107-1122.
    5. Shahbaz, Muhammad & Chaudhary, A.R. & Ozturk, Ilhan, 2017. "Does urbanization cause increasing energy demand in Pakistan? Empirical evidence from STIRPAT model," Energy, Elsevier, vol. 122(C), pages 83-93.
    6. Shahbaz, Muhammad & Loganathan, Nanthakumar & Sbia, Rashid & Afza, Talat, 2015. "The effect of urbanization, affluence and trade openness on energy consumption: A time series analysis in Malaysia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 47(C), pages 683-693.
    7. Liddle, Brantley & Lung, Sidney, 2015. "Revisiting energy consumption and GDP causality: Importance of a priori hypothesis testing, disaggregated data, and heterogeneous panels," Applied Energy, Elsevier, vol. 142(C), pages 44-55.
    8. Rafiq, Shuddhasattwa & Salim, Ruhul & Nielsen, Ingrid, 2016. "Urbanization, openness, emissions, and energy intensity: A study of increasingly urbanized emerging economies," Energy Economics, Elsevier, vol. 56(C), pages 20-28.
    9. Liddle, Brantley & Lung, Sidney, 2013. "The long-run causal relationship between transport energy consumption and GDP: Evidence from heterogeneous panel methods robust to cross-sectional dependence," Economics Letters, Elsevier, vol. 121(3), pages 524-527.
    10. Sakiru Adebola Solarin, 2017. "The Role of Urbanisation in the Economic Development Process: Evidence from Nigeria," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 11(3), pages 223-255, August.
    11. Ravetti, Chiara & Cambini, Carlo, 2021. "Energy Use Beyond GDP: A Dynamic Panel Analysis with Different Development Indicators," Working Papers 10-2021, Copenhagen Business School, Department of Economics.
    12. Md zulquar Nain & Sai sailaja Bharatam & Bandi Kamaiah, 2017. "Electricity consumption and NSDP nexus in Indian states: a panel analysis with structural breaks," Economics Bulletin, AccessEcon, vol. 37(3), pages 1581-1601.
    13. Dobnik, Frauke, 2011. "Energy Consumption and Economic Growth Revisited: Structural Breaks and Cross-section Dependence," Ruhr Economic Papers 303, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    14. Breitung, Jörg & Pesaran, Mohammad Hashem, 2005. "Unit roots and cointegration in panels," Discussion Paper Series 1: Economic Studies 2005,42, Deutsche Bundesbank.
    15. Al Mamun, Md. & Sohag, Kazi & Hannan Mia, Md. Abdul & Salah Uddin, Gazi & Ozturk, Ilhan, 2014. "Regional differences in the dynamic linkage between CO2 emissions, sectoral output and economic growth," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 1-11.
    16. Muhammad Azam & Zia Ur Rehman & Yusnidah Ibrahim, 2022. "Causal nexus in industrialization, urbanization, trade openness, and carbon emissions: empirical evidence from OPEC economies," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(12), pages 13990-14010, December.
    17. Mumin Atalay Cetin & Ibrahim Bakirtas, 2020. "The long-run environmental impacts of economic growth, financial development, and energy consumption: Evidence from emerging markets," Energy & Environment, , vol. 31(4), pages 634-655, June.
    18. Smyth, Russell & Narayan, Paresh Kumar, 2015. "Applied econometrics and implications for energy economics research," Energy Economics, Elsevier, vol. 50(C), pages 351-358.
    19. Çoban, Serap & Topcu, Mert, 2013. "The nexus between financial development and energy consumption in the EU: A dynamic panel data analysis," Energy Economics, Elsevier, vol. 39(C), pages 81-88.
    20. Anouba Acha Arnaud & Huang Dechun & Haihua Ying & Koffi Yao Stephane Landry, 2023. "The Impact of urbanization on banking development: Evidence from the West African Economic and Monetary Union (WAEMU)," International Journal of Science and Business, IJSAB International, vol. 22(1), pages 1-13.

    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:22:y:2015:i:5:p:349-355. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEL20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.