The Critical Role of Electricity Generation in Driving Economic Growth in Developing Nations: The Case of the Philippines

Zachariah John A. Belmonte, Michael N. Young, Yogi Tri Prasetyo () and Rexmelle F. Decapia
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Zachariah John A. Belmonte: Mapúa University
Michael N. Young: Mapúa University
Yogi Tri Prasetyo: Mapúa University
Rexmelle F. Decapia: Technological University of the Philippines

A chapter in New Perspectives and Paradigms in Applied Economics and Business, 2025, pp 45-56 from Springer

Abstract: Abstract This study examines the causal relationship between electricity generation (EG) and economic growth in the Philippines. Using Granger causality analysis, data from 2004 to 2018 were analyzed. Before analysis, the stationarity of the data was assessed through the Phillips–Perron unit root test (PP-URT) and cointegration using Johansen's cointegration test (CIT). Results indicate a unidirectional causality from EG to economic growth, suggesting that high levels of EG drive GDP. This study found that electricity generation helps drive economic growth in a developing nation like the Philippines. It was established that electricity generation and consumption have a significant influence on economic development, emphasizing their critical role in Philippine economic growth. The findings of this study have practical implications for policymakers, businesses, and investors. Policymakers can use this information to prioritize investments in energy infrastructure, ensuring a reliable and sustainable electricity supply to support economic growth.

Keywords: Causality; Economic growth; Energy; Electricity consumption; Granger causality test (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-77363-1_4

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DOI: 10.1007/978-3-031-77363-1_4

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