ARTICLE

ELECTRICITY CONSUMPTION AND ECONOMIC GROWTH A TIME SERIES STUDY ON PAKISTAN

  1. HOME
  2. ARTICLE

03 Pages : 24-37

http://dx.doi.org/10.31703/ger.2020(V-I).03      10.31703/ger.2020(V-I).03      Published : Mar 2020

Electricity Consumption and Economic Growth: A Time-Series Study on Pakistan

Abstract

    In Socio-Economic development, the role of energy is very crucial, and often its consumption indicates the level of economic development and is considered as a vital ingredient of sustainable economic growth. Electricity as a key input variable plays a supreme role in the process of industrialization (IND), Economic growth (GDP) as well as technological progress (TEC) of a country. By utilizing time-series data from 1975 up to 2017, the study attempted to examine the nexus between EC and GDP of Pakistan in the Cobb Douglas production function framework. The study results reveal that EC, labor force, capital stocks, and technology, have positively and significantly affect Pakistans GDP growth. The study concluded and recommended that economic performance cannot be improved in the absence of continuous usage of electricity. Therefore, to achieve the desired economic growth path, uninterrupted electricity consumption is pivotal.

    Economic Growth, Electricity Usage, Industrialization.

    (1) Raza Muhammad khan
    Teaching Asistant, Department of Economics,Hazara University, Mansehra, KP, Pakistan.
    (2) Sohail Farooq
    Assistant Professor,Department of Economics,Hazara University, Mansehra, KP, Pakistan.
    (3) Muhammad Akram Gilal
    Associate Professor,Department of Economics,University of Sindh, Jamshoro, Sindh, Pakistan.
Fulltext PDF

References

  • Akarca, A.T., & Long, T.V. (1980). On the relationship between energy and GDP: A reexamination. J. EnergyDev., 5, 326- 331
  • Akinlo, A. E. (2009). Electricity consumption and economic growth in Nigeria: evidence from cointegration and co-feature analysis. Journal of Policy Modeling, 31(5), 681-693.
  • Alam, S., & Butt, M. S. (2002). Causality between energy and economic growth in Pakistan: An application of co-integration and error-correction modeling techniques. Pacific and Asian Journal of Energy, 12(2), 151.
  • Alter, N., & Syed, S. H. (2011) An Empirical Analysis of Electricity Demand in Pakistan. International Journal of Energy Economics and Policy, 1(4), 116.
  • Altinay, G., Karagol, E. (2005). Electricity consumption and economic growth: evidence from Turkey. Energy Econ. 27, 849-856
  • Amjid, S. S., Bilal, M. Q., Nazir, M. S., & Hussain, A. (2011). Biogas, renewable energy resource for Pakistan. Renewable and Sustainable Energy Reviews, 15(6), 2833- 2837.
  • Ang, J. B. (2008). Economic development, pollutant emissions and energy consumption in Malaysia. Journal of Policy Modeling, 30(2), 271-278.
  • Anwar, S., & Sun, S. (2011). Financial development, foreign investment and economic growth in Malaysia. Journal of Asian Economics, 22(4), 335-342.
  • Aqeel, A., Butt, M.S. (2001). The Relationship between Energy Consumption and Economic Growth in Pakistan. AsiaPac. Dev. J. 8, 101-110
  • Asafu-Adjaye, J. (2000). The Relationship between energy consumption, energy prices and economic growth: time series evidence from Asian developing countries. Energy Econ. 22, 615-625
  • Batliwala, S., & Reddy, A. K. (1994). Energy consumption and population. Population: The Complex Reality.
  • Belloumi, M. (2009). Energy consumption and GDP in Tunisia: co-integration and causality analysis. Energy Policy, 37(7), 2745-2753.
  • Chen, S.T., Kuo, H.I., Chen, C.C. (2007).The relationship between GDP and electricity consumption in 10 Asian countries. Energy Policy 35, 2611-2621
  • Cheng, B. S. (1995). An investigation of cointegration and causality between energy consumption and economic growth. Journal of Energy and Development, 21(1).
  • Central Intelligence Agency World Fact Book (CIA-WFB). (2018). Asia Pakistan Report. Central Intelligence Agency, Washington, DC.Available . Accessed 17 may 2018. https://www.indexmundi.com/pakistan/electricity_access.html
  • Cifter, A., &Ozun, A. (2007). Multi-scale causality between energy consumption and GNP in emerging markets: evidence from Turkey.
  • De Mello Jr, L. R. (1997). Foreign direct investment in developing countries and growth: A selective survey. The Journal of Development Studies, 34(1), 1-34
  • Ellahi, N. (2011) Testing the relationship between electricity supply, development of industrial sector and economic growth: an empirical analysis using time series data for Pakistan. International Journal of Management Science and Engineering Management, 6(4), 272-277.
  • Erol, U., Yu, E.S.H. (1987). On the causal relationship between energy and income for industrialized countries. J. Energy Dev. 13, 113-122
  • Ghosh, S. (2002) Electricity consumption and economic growth in India, Energy Policy, 30, 125129.
  • Gurgul, H., & Lach, Ł. (2012). The electricity consumption versus economic growth of the Polish economy. Energy Economics, 34(2), 500-510.
  • Halicioglu, F. (2009). An econometric study of CO 2 emissions, energy consumption, income and foreign trade in Turkey. Energy Policy, 37(3), 1156-1164.
  • Haq, M. (2015) CPEC group forecasts energy shortfall to increase to 10,844 MW. The Express Tribune http://tribune.com.pk/story/974259/cpec-group-forecastsenergy-shortfall-to-increase-to-10844mw/
  • Husain, T. (2010). Pakistan's energy sector issues: energy efficiency and energy environmental links. The Lahore Journal of Economics, 15, 33.
  • IEA (2018). [Accessed on 07-02-2019] https://www.iea.org/weo2018/
  • Jamil, F., & Ahmad, E. (2010).The relationship between electricity consumption, electricity prices and GDP in Pakistan. Energy Policy, 38(10), 6016-6025
  • Jumbe, C. B. (2004). Cointegration and causality between electricity consumption and GDP: empirical evidence from Malawi. Energy Economics, 26(1), 61-68.
  • Kalar, Z-H. &Khilji, B.A. (2011). Energy Consumption and Economic Growth ln Pakistan. Journal of International Academic Research, 11(1), 33-36.
  • Karagol, E. (2006). The relationship between external debt, defence expenditures and GNP revisited: The case of Turkey. Defence and Peace Economics, 17(1), 47-57.
  • Khan, M. A., Qayyum, A., & Ahmad, E. (2007). Dynamic modeling of energy and growth in South Asia [with Comments].The Pakistan Development Review, 481-498
  • Kouakou A. (2011). Economic Growth and Electricity Consumption in Cote d‘Ivoire: Evidence from Time Series Analysis, Energy Policy, 39, 3638-3644
  • Kraft, J., and Kraft, A. (1978). On the relationship between energy and GDP. J. Energy Dev. 3, 401-403
  • Lean, H. H., & Smyth, R. (2010). On the dynamics of aggregate output, electricity consumption and exports in Malaysia: evidence from multivariate Granger causality tests. Applied Energy, 87(6), 1963-1971.
  • Liao, H., & Wei, Y. M. (2010). China's energy consumption: A perspective from Divisia aggregation approach. Energy, 35(1), 28-34.
  • Lorde, T., Waithe, K., & Francis, B. (2010). The importance of electrical energy for economic growth in Barbados. Energy Economics, 32(6), 1411-1420.
  • Lotfalipour, M. R., Falahi, M. A., & Ashena, M. (2010). Economic growth, CO2 emissions, and fossil fuels consumption in Iran. Energy, 35(12), 5115-5120.
  • Macdonald, R. (1993) long run purchasing parity: is it for real? The Review of Economics and Statistics, 75(4), 690-695.
  • Malik, A. (2012). Power crisis in Pakistan: a crisis in governance. Pakistan Institute of Development Economics.
  • Masih, A.M.M., and Masih, R., (1996). Energy consumption, real income and temporal causality: results from a multi-country study based on Cointegration and errorcorrection modeling techniques. Energy Economics 18, 165183.
  • Mehra, M. (2007). Energy consumption and economic growth: the case of oil exporting countries, Energy Policy, 35, 2939-2945.
  • Muhammad, S., Lean, H. H., & Muhammad, S. S. (2011). Environmental Kuznets curve and the role of energy consumption in Pakistan.
  • Narayan, P.K., & Smyth, R. (2009) Electricity consumption, employment and real income in Australia: evidence from multivariate Granger casualty test, Energy Policy, 33, 11091116.
  • Nathan, T. M., Liew, V. K., & Wong, W. K. (2016). Disaggregated energy consumption and sectoral outputs in Thailand: ARDL bound testing approach. Journal of Management Sciences, 3(1), 34-46.
  • Nourzad, F. (2000). The productivity effect of government capital in developing and industrialized countries. Applied Economics, 32(9), 1181-1187
  • Nwankwo. M., Chigozie. O., Njogo. D ., & Oluchukwu. B. (2010) The Effect of Electricity Supply on Industrial Production within the Nigerian Economy (1970-2010).
  • Odhiambo, N. M. (2009). Electricity consumption and economic growth in South Africa: A trivariate causality test. Energy Economics, 31(5), 635-640.
  • Omri, A. (2013). CO2 emissions, energy consumption and economic growth nexus in MENA countries: evidence from simultaneous equations models. Energy Economics, 40, 657-664.
  • Omri, A., & Kahouli, B. (2014). Causal relationships between energy consumption, foreign direct investment and economic growth: Fresh evidence from dynamic simultaneous-equations models. Energy Policy, 67, 913-922.
  • Ouédraogo, I. M. (2010). Electricity consumption and economic growth in Burkina Faso: A cointegration analysis. Energy Economics, 32(3), 524-531.
  • Pakistan-Economic.-Survey.(2016-17). Retrieved from http://www. finance. gov.pk/survey/chapters/14/01/Growth/ and/Investment.
  • Pindyck, R. S., & Daniel, L. Rubinfeld(1998) Econometric Models and Economic Forecasts New York.
  • Raza, S. A., Jawaid, S. T., & Siddiqui, M. H. (2016). Electricity consumption and economic growth in South Asia. South Asia Economic Journal, 17(2), 200-215
  • Sahir, M. H., & Qureshi, A. H. (2007). Specific concerns of Pakistan in the context of energy security issues and geopolitics of the region. Energy Policy, 35(4), 2031- 2037.
  • Sari, R., Ewing, B. T., & Soytas, U. (2008). The relationship between disaggregate energy consumption and industrial production in the United States: an ARDL approach. Energy Economics, 30(5), 2302-2313.
  • Sezgin, Y. (2004). Theorizing Formal Pluralism: Quantification of Legal Pluralism for Spatio-Temporal Analysis. The Journal of Legal Pluralism and Unofficial Law, 36(50), 101-118.
  • Shahbaz, M., & Feridun, M. (2012). Electricity consumption and economic growth empirical evidence from Pakistan. Quality & Quantity, 46(5), 1583-1599.
  • Shahbaz, M., Zeshan, M., & Afza, T. (2012). Is energy consumption effective to spur economic growth in Pakistan? New evidence from bounds test to level relationships and Granger causality tests. Economic Modelling,29(6), 2310- 2319.
  • Sharif, A., & Raza, S. A. (2016). Dynamic relationship between urbanization, energy consumption and environmental degradation in Pakistan: Evidence from structure break testing. Journal of Management Sciences, 3(1), 1-21
  • Sharma, S. S. (2010). The relationship between energy and economic growth: empirical evidence from 66 countries. Applied Energy, 87(11), 3565-3574.
  • Solow, R. M. (1956). A contribution to the theory of economic growth. The quarterly journal of economics, 70(1), 65-94.
  • Stern, D. I., & Cleveland, C. J. (2004). Energy and economic growth. Encyclopedia of Energy, 2, 35-51.
  • Tang, C.F. (2009). A re-examination of the relationship between electricity consumption and economic growth in Malaysia. Energy Policy 36, 3077-3085.
  • Bhutta, Z. (2018).
  • The Expess Tribune. (2018). Retrieved from https://www.google.com
  • Toda, H.Y., & Yamamoto, T. (1995). Statistical inferences in vector Autoregressions with possibly integrated processes. J. Econom. 66, 225-250.
  • Toman, M. A., &Jemelkova, B. (2003). Energy and economic development: An assessment of the state of knowledge. The Energy Journal, 93-112.
  • Udah, E. B. (2010). Industrial Development, Electricity and Economic Performance in Nigeria. European Journal of Economics, Finance and Administrative Sciences.18.
  • Wolde-Rafael, Y. (2004) Disaggregated industrial energy consumption and GDP: the case of Shanghai 1952-1999, Energy Economics, 26, 69-75.
  • Wolde-Rufael, Y. (2006). Electricity consumption and economic growth: a time series experience for 17 African countries. Energy Policy, 34(10), 1106-1114.
  • Wolde-Rufael, Y. (2009). Energy consumption and economic growth: the experience of African countries revisited. Energy Economics, 31(2), 217-224.
  • World Economic Outlook. (2018). Retrieved from https://www.iea.org/reports/worldenergy-outlook-2018
  • Yoo, S. H., & Kwak, S. Y. (2010). Electricity consumption and economic growth in seven South American countries. Energy Policy, 38(1), 181-188.
  • Yuan, J. H., Kang, J. G., Zhao, C. H., & Hu, Z. G. (2008). Energy consumption and economic growth: evidence from China at both aggregated and disaggregated levels. Energy Economics, 30(6), 3077-3094.
  • Zaman, K., Khan, M. M., Ahmad, M., & Rustam, R. (2012). Determinants of electricity consumption function in Pakistan: Old wine in a new bottle. Energy Policy, 50, 623-634.
  • Zaleski, P. (2001). Energy and geopolitical issues. Energy Security, Discovery Publishing House, New Delhi. S
  • Zhang, X. P., & Cheng, X. M. (2009). Energy consumption, carbon emissions, and economic growth in China. Ecological Economics, 68(10), 2706-2712.

Cite this article

APA

    APA : khan, R. M., Farooq, S., & Gilal, M. A. (2020). Electricity Consumption and Economic Growth: A Time-Series Study on Pakistan. Global Economics Review, V(I), 24-37. https://doi.org/10.31703/ger.2020(V-I).03

CHICAGO

    CHICAGO : khan, Raza Muhammad, Sohail Farooq, and Muhammad Akram Gilal. 2020. "Electricity Consumption and Economic Growth: A Time-Series Study on Pakistan." Global Economics Review, V (I): 24-37 doi: 10.31703/ger.2020(V-I).03

HARVARD

    HARVARD : KHAN, R. M., FAROOQ, S. & GILAL, M. A. 2020. Electricity Consumption and Economic Growth: A Time-Series Study on Pakistan. Global Economics Review, V, 24-37.

MHRA

    MHRA : khan, Raza Muhammad, Sohail Farooq, and Muhammad Akram Gilal. 2020. "Electricity Consumption and Economic Growth: A Time-Series Study on Pakistan." Global Economics Review, V: 24-37

MLA

    MLA : khan, Raza Muhammad, Sohail Farooq, and Muhammad Akram Gilal. "Electricity Consumption and Economic Growth: A Time-Series Study on Pakistan." Global Economics Review, V.I (2020): 24-37 Print.

OXFORD

    OXFORD : khan, Raza Muhammad, Farooq, Sohail, and Gilal, Muhammad Akram (2020), "Electricity Consumption and Economic Growth: A Time-Series Study on Pakistan", Global Economics Review, V (I), 24-37

TURABIAN

    TURABIAN : khan, Raza Muhammad, Sohail Farooq, and Muhammad Akram Gilal. "Electricity Consumption and Economic Growth: A Time-Series Study on Pakistan." Global Economics Review V, no. I (2020): 24-37. https://doi.org/10.31703/ger.2020(V-I).03