How Does Electricity Affect Economic Growth? Examining the Role of Government Policy to Selected Four South Asian Countries

Mohammad Mafizur Rahman (), Istihak Rayhan and Nahid Sultana
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Mohammad Mafizur Rahman: School of Business, University of Southern Queensland, Toowoomba, QLD 4350, Australia
Istihak Rayhan: Department of Economics, Jahangirnagar University, Dhaka 1340, Bangladesh
Nahid Sultana: School of Business, University of Southern Queensland, Toowoomba, QLD 4350, Australia

Energies, 2023, vol. 16, issue 3, 1-17

Abstract: Electricity consumption and government policy are two vital elements for economic growth. Thus, this study explores the roles of electricity use and government policy in the economic growth of the selected four South Asian countries over the period from 1980 to 2014. The study includes the government policy variable in the extended Cobb–Douglas production function of the electricity driven growth model, which was absent in earlier studies. The pooled mean group-based panel autoregressive distributed lag (P-ARDL) method is used for empirical investigation, while fully modified ordinary least squares (FMOLS) and dynamic ordinary least square (DOLS) methods are used for checking the sensitivity of the P-ARDL estimates. Our results reveal that the effects of electricity, government spending, financial development and capital formation have significant positive effects on the economic growth of South Asia. However, exports and imports are found to have detrimental effects. Causality test reveals a unidirectional causality from electricity consumption to economic growth that supports the growth hypothesis. Following the findings, important policy recommendations are made to foster the economic growth in the South Asian countries.

Keywords: economic growth; electricity use; government policy; panel ARDL; South Asian countries (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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