Examining the Causality of Energy Between Growth in Asian Countries: Panel Data Analysis

Abstract

Examining the ramifications of energy consumption on economic growth holds paramount significance in crafting comprehensive strategies for energy and environmental policymaking. A nuanced understanding of the intricate interplay between energy utilization and economic development is imperative to inform judicious policy decisions. In light of this advancement, the present paper undertakes an empirical reassessment, scrutinizing the direction of causality and the sign within a panel framework between energy consumption and gross domestic product (GDP) across seventeen meticulously chosen Asian countries. The findings disclose the presence of long-run stable equilibriums within these nations, with energy consumption (EC) exerting a positive influence on gross domestic product (GDP). In the short run, causality is observed from energy consumption to GDP, whereas in the long run, a causal relationship is identified from GDP to energy consumption. The temporal dynamics revealed in the study suggest a nuanced relationship between energy consumption and economic growth. In the short run, energy emerges as a potent driver of economic expansion, highlighting its immediate impact on the gross domestic product (GDP). This underscores the critical role of energy in powering various sectors and activities that contribute to short-term economic development. Contrastingly, the observed long-run causality from GDP to energy consumption implies a more complex and sustained interdependence. In this scenario, economic growth becomes a driving force shaping the trajectory of energy consumption patterns over an extended period. This intricate relationship suggests that as economies evolve and mature, the structural shifts in production and consumption patterns become influential determinants of energy use.  Efficient coordination and cooperation towards the implementation of energy conservation policies to support Inclusion of efficient coordination and collaborative efforts in the regional agenda is imperative for the effective implementation of energy conservation policies, thereby fostering sustainable economic development.