The Relationship between Energy Consumption and Economic Growth in the Baltic Countries’ Agriculture: A Non-Linear Framework

Daiva Makutėnienė (), Algirdas Justinas Staugaitis, Bernardas Vaznonis and Gunta Grīnberga-Zālīte
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Daiva Makutėnienė: Department of Applied Economics, Finance and Accounting, Faculty of Bioeconomy Development, Agriculture Academy, Vytautas Magnus University, 53361 Kaunas, Lithuania
Algirdas Justinas Staugaitis: Department of Applied Economics, Finance and Accounting, Faculty of Bioeconomy Development, Agriculture Academy, Vytautas Magnus University, 53361 Kaunas, Lithuania
Bernardas Vaznonis: Department of Applied Economics, Finance and Accounting, Faculty of Bioeconomy Development, Agriculture Academy, Vytautas Magnus University, 53361 Kaunas, Lithuania
Gunta Grīnberga-Zālīte: Institute of Economics and Regional Development, Latvia University of Life Sciences and Technologies, 3001 Jelgava, Latvia

Energies, 2023, vol. 16, issue 5, 1-22

Abstract: The development of a country’s economy is directly related to the use of energy in that country’s economic sectors. Therefore, the energy–environmental Kuznets curve (EEKC) is often used when analysing a country’s potential and challenges in sustainable development, green economy, and green growth. This hypothesis tests whether there is an inverse “U”-shaped relationship between energy use and economic growth and is especially important when analysing developing countries to assess if, at a certain point, energy use begins to drop, resulting in fewer greenhouse gas emissions, environmental degradation, and the consumption of fossil-based fuels. This study aims to examine the relationship between energy consumption and economic growth in the Baltic States from 1995 to 2019, with a focus on the agriculture sector. The study uses the non-linear autoregressive distributed lag (NARDL) model for individual and panel time series. Total energy use, as well as electricity use, is included in the study, whereas gross value added is employed as a measure of economic growth. Research data analysis reveals that energy use in all three Baltic countries stabilises as gross value added increases. However, there is insufficient evidence to show that after a certain point, energy use begins to drop; thus, the hypothesis for the inverse “U”-shaped energy–environmental Kuznets curve (EEKC) is rejected. Research results have important practical implications regarding countries’ policies toward energy, including the use of electricity and sustainable development.

Keywords: agricultural development; gross value added; energy use; NARDL model; energy–environmental Kuznets curve (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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