Energy Consumption and Economic Growth
CHAPTER ONE
Objective of the study
The objective of the study are;
- To investigate the causal relationships between energy consumption and economic growth.
- To analyze the heterogeneity across countries and regions in the energy-growth relationship.
- To assess the role of energy efficiency improvements and technological innovation in shaping the energy-growth relationship.
CHAPTER TWO
REVIEWED OF RELATED LITERTURE
Introduction
Several empirical studies have been carried out on the examination of relationship between energy consumption and economic growth (see Ozturk, 2010). This study reviewed some of this study in order to gain an insight into the state of discussion on this topical issue. The relationship has been examined for different countries at different periods using different methodologies. A pioneer study conducted by Kraft and Kraft (1978) examined the relationship between the USA’s energy consumption and GNP for the period of 1947and 1974. The study found a unidirectional causality from GNP to energy consumption. Akarca and Long (1980) used the same data for the USA for 1947-1972 to examine the relationship between energy consumption and economic growth, the study found no causal evidence between the two variables. Erol and Yu (1987) using bivariate models tested the relationship between energy consumption and GDP for six selected developed economies, namely; Canada, England, France, Germany, Italy and Japan, with data from period 1952–1982. The study found a bidirectional causal relationship for Japan, unidirectional from energy consumption to GDP for Canada and unidirectional from GDP to energy consumption for Germany and Italy. They found no causality for France and England. Stern (2000) also examined the causal relationship between energy consumption and GDP in USA for 1948 – 1994 periods, using multivariate model. The study found no relationship between the variables. Masih and Masih (1996) using a cointegration analysis and vector auto regressive model examined the causal relationship among energy consumption, employment and output for Taiwan. from 1982–19997. The result showed that bi-directional causality existed for employment-output, and employment-energy consumption, but only unidirectional causality running from energy consumption to output. Soytas and Sari (2003) examined the causal link between energy consumption and GDP in the top (10) ten emerging markets – excluding China and G-7 countries. The study found out that bidirectional causality existed in Argentina, unidirectional causality running from energy consumption to GDP was found for Turkey, France, Germany and Japan, and from GDP to energy consumption for Korea and Italy. Soytas, et al. (2001) examined the relationship between energy consumption and GDP for Turkey for the period between 1960 and 1995 and found a unidirectional relationship from energy consumption to GDP for the period. Chontanawat et al. (2006) investigated the causal relation between energy consumption and GDP for 30OECD and 78 non-OECD countries. Their findings showed that causality ran from aggregate energy consumption to GDP and GDP to energy consumption is more prevalent in the advanced OECD countries compared to the developing non-OECD countries. Those findings imply that a policy to reduce energy consumption aimed at reducing emission is likely to have greater impact on the GDP of the developed rather than the developing countries. Ozun and Cifter (2007) believe that methodology has crucial effects on the degree and direction of the causality between energy consumption and economic growth. They argue that in emerging financial markets, the test results of economic time series are mostly methodology dependent. Ozun and Cifter, using a wavelet analysis as a semi parametric model, test for multi scale causality between electricity consumption and economic growth from 1968-2002 period. The study found that in the short run, there was a feedback relationship between GNP and energy consumption, while in the long run, GNP leads to energy consumption. Wavelet correlation between GNP and energy consumption is maximum at 3rd time scale (5-8years) and this shows that GNP affects electricity consumption maximally around 5-8 years later in the long-run. They also found that the magnitude of the wavelet correlation changes based on time-scale for GNP and energy consumption and this indicates that GNP and energy consumption are fundamentally different in the long run. Costantini and Martini (2009) analysed the causal link between economic growth and energy consumption by adopting a Vector Error Correction Model for nonstationary and co integrated panel data with a large sample of developed and developing countries and four distinct energy sectors. The results showed that alternative country sample sharply affect the causality relations, particularly in a multivariate multi-sectoral framework. Besides studies which examined energy as a whole, some studies examine energy by separating it into its sub-component such as electricity and petroleum. Ghosh (2002) examined economic growth and electricity in India between 1950 and 1997. He found a unidirectional causality from economic growth to electricity consumption.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain Energy consumption and economic growth. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing Energy consumption and economic growth
Summary
This study was on Energy consumption and economic growth. Three objectives were raised which included: To investigate the causal relationships between energy consumption and economic growth, to analyze the heterogeneity across countries and regions in the energy-growth relationship and to assess the role of energy efficiency improvements and technological innovation in shaping the energy-growth relationship. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from PHCN in Port Harcourt. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
In conclusion, this study has provided valuable insights into the relationship between energy consumption and economic growth, shedding light on its complexities, causal mechanisms, and policy implications. The analysis suggests the presence of bidirectional causality between energy consumption and economic growth, with evidence of feedback loops and dynamic interactions between these variables. While economic growth drives energy demand through increased industrial activity and consumption, energy availability and affordability also play a crucial role in sustaining economic development.
Recommendations
Based on the findings of this study, the following recommendations are offered for future research and policy action:
- Future research should conduct longitudinal studies to further explore the temporal dynamics and long-term trends in the energy-growth nexus, considering historical patterns, structural changes, and policy impacts over time.
- Comparative analyses across countries and regions can provide valuable insights into the drivers of heterogeneity in the energy-growth relationship, enabling policymakers to identify best practices and lessons learned from diverse contexts.
- Rigorous policy evaluation studies are needed to assess the effectiveness of energy policies, climate change mitigation strategies, and sustainable development initiatives in achieving their intended objectives and fostering inclusive economic growth.
- Collaboration between researchers, policymakers, industry stakeholders, and civil society actors is essential for addressing the complex challenges posed by the energy-growth nexus. Interdisciplinary approaches that integrate insights from economics, energy studies, environmental science, and policy analysis can facilitate informed decision-making and foster innovation.
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