scholarly journals Causality between Trade Openness and Energy Consumption: What Causes What in High, Middle and Low Income Countries

2014 ◽  
Vol 53 (4II) ◽  
pp. 423-459
Author(s):  
Muhammad Shahbaz ◽  
Samia Nasreen ◽  
Chong Hui Ling ◽  
Rashid Sbia
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Energy Consumption ◽  
Scale Effect ◽  
Energy Demand ◽  
Trade Openness ◽  
Composite Effect ◽  
Domestic Production ◽  
Technique Effect ◽  
Advanced Technologies

Trade liberalisation has affected the flow of trade (goods and services) between developed and developing countries. The Heckscher-Ohlin trade theory reveals that under free trade, developing countries would specialise in the production of those goods that are produced by relatively abundant factors of production such as labour and natural resources. Developed countries would specialise in the production of those goods that are produced by human capital and manufactured in capital-intensive activities. Trade openness entails movement of goods produced in one country for either consumption or further processing to other country. Production of those goods is not possible without the effective use of energy. Trade openness affects energy demand via scale effect, technique effect and composite effect. Other things being same, trade openness increases economic activities, thus stimulates domestic production and hence economic growth. A surge in domestic production increases energy demand , which is commonly referred as scale effect. Such scale effect is caused by trade openness. Economic condition of the country and extent of relationship between economic growth and trade openness determine the impact of trade openness on energy consumption [Shahbaz, et al. (2013); Cole (2006)]. Trade openness enables developing economies to import advanced technologies from developed economies. The adoption of advanced technology lowers energy intensity. The use of advanced technologies result in less energy consumption and more output that is usually referred to as technique effect [Arrow (1962)]. Composite effect reveals the shift of production structure from agriculture to industry with the use of energy intensive production techniques. In initial stages of economic development economy is based largely on agriculture sector, thus the use of energy is relatively less. As economy starts shifting from agriculture to industry, the energy consumption increases.

scholarly journals Investigating Energy Use, Environment Pollution, and Economic Growth in Developing Countries

2020 ◽  
Vol 24 (1) ◽  
pp. 275-293 ◽  
Author(s):  
Hooman Abdollahi
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Energy Consumption ◽  
Fossil Fuels ◽  
Energy Use ◽  
Total Population ◽  
Labour Force ◽  
Trade Openness ◽  
Environment Pollution ◽  
Bidirectional Relationship

AbstractAttaining continuous economic growth entails special consideration of energy sector and the environment. Compliance with this purpose may be more intricate in the uncertain milieu of developing countries. The present paper examines the nature of causality between energy consumption, environment pollution, and economic growth in 8 contiguous developing countries, considering GDP per capita, CO2 emissions, energy use, labour force, total population, urban population, capital formation, financial development, and trade openness. The author applied spatial simultaneous equations for random effects panel data to investigate the spatial interactions of adjacent countries over the period from 1998 to 2011. The findings reveal that energy consumption, environment degradation, and economic growth of a country influence those of its neighbours. Additionally, the results document bidirectional causal relationship between economic growth and environment pollution, as well as between environment pollution and energy consumption. Thus, there is a bidirectional relationship between energy use and economic growth. Fossil fuels replacement with renewable energy and usage of tax instruments to reduce greenhouse gas are recommended.

scholarly journals Investigating the Nexus among Sulfur Dioxide Emission, Energy Consumption and Economic Growth: Empirical Evidence from Pakistan

2021 ◽  
Author(s):  
Khuda Bakhsh ◽  
Tanzila Akmal ◽  
Tauqeer Ahmad ◽  
Qasir Abbas
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Sulfur Dioxide ◽  
Scale Effect ◽  
Environmental Degradation ◽  
Capital Accumulation ◽  
Fossil Fuels ◽  
Policy Implications ◽  
Technique Effect ◽  
The Relationship

Abstract Developing countries like Pakistan majorly depends on fossil fuels for achieving higher economic growth but have sloppy environmental rules and regulations in order to attract foreign direct investment (FDI). As a result, energy consumption is considered as the primary cause of environmental degradation. Besides CO2 emission, environmental degradation is also associated with emission of sulfur dioxide (SO2). The purpose of this study was to investigate the relationship among SO2 emissions, energy consumption, economic growth and FDI in Pakistan. By applying the 3SLS method study has estimated the scale effect, composition effect and technique effect. The scale effect and technique effect findings indicated that capital stock, FDI, and SO2 emissions all had a significant impact on GDP. When the capital accumulation effects of FDI were considered, the relationship between FDI and stock of capital was found to be positive. According to the technique effect results, FDI, population density, and energy consumption were all significantly related to SO2 emissions. The study came to a conclusion with significant policy implications.

Study on Dynamic Relationship between Economic Growth and Energy Consumption in Chongqing - Based on 1980-2011 Data

2013 ◽  
Vol 448-453 ◽  
pp. 4319-4324
Author(s):  
Sheng Wang ◽  
Chun Yan Dai ◽  
En Chuang Wang ◽  
Chun Yan Li
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Energy Consumption ◽  
Energy Demand ◽  
Industrial Structure ◽  
Impulse Response Function ◽  
Improve Energy Efficiency ◽  
Dynamic Relationship ◽  
Equilibrium Relationship

Analyzed the dynamic interaction characteristics of Chongqing Economic growth and energy consumption between 1980-2011 based on vector auto regression model, impulse response function. The results showed that: 1 Between the Chongqing's economic growth and energy consumption exist the positive long-term stable equilibrium relationship, Chongqing's economic development depending on energy consumption is too high, to keep the economy in Chongqing's rapid economic development, energy relatively insufficient supply sustainable development must rely on the energy market, which will restrict the development of Chongqing's economy. 2At this stage, Chongqing continuing emphasis on optimizing the industrial structure to improve energy efficiency at the same time, the key is to establish and improve the energy consumption intensity and total energy demand "dual control" under the security system, weakening the energy bottleneck effect on economic growth.

scholarly journals The Impact of Industrialization, Trade Openness, Financial Development, and Energy Consumption on Economic Growth in Indonesia

Economies ◽  
2021 ◽  
Vol 9 (4) ◽  
pp. 174
Author(s):  
Khalid Eltayeb Elfaki ◽  
Rossanto Dwi Handoyo ◽  
Kabiru Hannafi Ibrahim
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Least Squares ◽  
Financial Development ◽  
Correction Term ◽  
Trade Openness ◽  
Ordinary Least Squares ◽  
Distributed Lag ◽  
Long Run ◽  
The Impact

This study aimed to scrutinize the impact of financial development, energy consumption, industrialization, and trade openness on economic growth in Indonesia over the period 1984–2018. To do so, the study employed the autoregressive distributed lag (ARDL) model to estimate the long-run and short-run nexus among the variables. Furthermore, fully modified ordinary least squares (FMOLS), dynamic least squares (DOLS), and canonical cointegrating regression (CCR) were used for a more robust examination of the empirical findings. The result of cointegration confirms the presence of cointegration among the variables. Findings from the ARDL indicate that industrialization, energy consumption, and financial development (measured by domestic credit) positively influence economic growth in the long run. However, financial development (measured by money supply) and trade openness demonstrate a negative effect on economic growth. The positive nexus among industrialization, financial development, energy consumption, and economic growth explains that these variables were stimulating growth in Indonesia. The error correction term indicates a 68% annual adjustment from any deviation in the previous period’s long-run equilibrium economic growth. These findings provide a strong testimony that industrialization and financial development are key to sustained long-run economic growth in Indonesia.

scholarly journals Dynamic Causality Among FDI, Economic Growth and CO2 Emissions in India With Open Markets and Technology Gap

2020 ◽  
Vol 11 (3) ◽  
pp. 15-31 ◽  
Author(s):  
Ritu Rana ◽  
Manoj Sharma
Keyword(s):  
Economic Growth ◽  
Energy Consumption ◽  
Co2 Emissions ◽  
Trade Openness ◽  
World Bank Group ◽  
Pollution Haven Hypothesis ◽  
Technology Gap ◽  
Development Indicators ◽  
Pollution Haven ◽  
Bank Group

This study examines the causality relationships between FDI, economic growth (in terms of GDP) and the natural environment, in terms of CO2 emissions and energy consumption, along with two more variables of interest i.e., trade openness and technology gap in the context of India. The data used in the study is obtained from World Development Indicators (WDI) of the World Bank Group for the period 1980 to 2014. The study employed the dynamic multivariate Toda-Yamamoto (TY) approach that uses the modified Wald (MWALD) test. The results show that FDI is neither causing economic growth nor is it bridging the technology gap directly in India. The results also indicate the existence of a Pollution Haven Hypothesis in India as the FDI is causing environmental degradation, i.e. CO2 emissions and energy consumption. Also, FDI is, though not causing GDP directly, but is doing so indirectly through CO2 emissions validating the existence of Pollution Haven Hypothesis. FDI is causing trade openness in India, but that openness is again causing more FDI which is doing no good for India.

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