Time Series Analysis of Global Energy Indices: Logarithmic and Normalized Techniques for Developmental Studies

Diverse opinions exist in the time series analysis of energy and related indices, difference in methodology, sample size, and time variation. This paper will make a conscious effort to converge the divergent outlooks. To accomplish this essential task, five energy indices consisting of energy consumption (EC), gross domestic product (GDP), carbon dioxide emission (CDE), the human development index (HDI), and oil price (OP) were selected. Two analytical methods were adopted, namely logarithmic and normalized techniques, which are designed to complement each other in drawing unfalsified statistical inference concerning the causality between the energy indices. The methods were subjected to four statistical tests and analyses: the augmented Dickey-Fuller, cointegration, pairwise Granger causality, and vector error correction model (VECM). Irrespective of prevailing challenges, both logarithmic and normalized techniques unanimously filtered out causalities. This consisted of neural flow between oil price and energy consumption, gross domestic product and carbon dioxide emission, and energy consumption and the human development index, unidirectional flow between energy consumption and the human development index, oil price and energy consumption, gross domestic product and carbon dioxide emission, and the human development index and oil price, whereas a normalized technique established bidirectional flow between gross domestic product and the human development index, and the human development index and oil price. Pertinently, the research suggests appropriate policies that will generate sustainable development in all the causal directions. Assiduously, the overwhelming agreement between both techniques at the 0.05 level is recommended for further validation with more modern econometric tests.

Energy and Resource Security: Some Insights

The import-export paradox emerges when countries, despite being rich in resources, are not willing to use their resources and in turn import them from other countries thus, depleting the other countries’ resources. As a case study, the mining sector in India provides evidence of the import-export paradox as despite being rich in minerals, India imports three times its own production of the same. The growing global demand of energy only puts more stress on this issue and thus it is crucial to address this paradox in order to achieve energy and resource security. One of the ways for doing this could be by establishing a resource bank that treats resources as capital and by doing so it ensures that the resources being used are also being replenished. Steps can also be taken at G20 level to develop a cooperative framework to address the same. At the Indian level, initiatives such as the International Solar Alliance can be strengthened by increased allocation of finances in order to build greater capacities.