Critical Analysis of Energy Consumption and Its Impact on Countries Economic Growth: An empirical analysis base on Countries income level

Abstract

Energy is a very important and key factor for developing countries like China, India, and Pakistan have a growth rate of population is very high. In today's changing world scenario of Petroleum price high, that increasing the gap between demand and supply of energy in the World. Energy shortage is a test case for governments due to the high demand for energy due to rising commercial need, consumption, and industrialization. Current economic and energy crisis scenarios force me to work on those issues. An objective of the study is to test the long-run connection between energy consumption and economic progress from 1971 to 2021. This study adopts the Unit Root Test for stationary, Cointegrating equation and Vector Error Correction used for short-run/long-run relationship; Granger Causality test used for find-out the causal association, and Ordinary least square to examine the impact between energy sources and economic progress. The study result shows Oil, Gas and Electricity are equally important short run/long run, while the Coal log-run is more than in the short-run. The energy consumption to economic growth has a unidirectional causality, indicating energy is a factor that affects country growth. Regression results also confirm that energy significance on top for economic growth, Energy Sources; Gas and Electricity were useful but energy source Oil getting more attention in past decades. Currently, high-cost sources of energy, i.e. up Oil prices, this study suggest the alternate energy source nuclear, wind and solar to ensure low-cost energy generation to economic growth.