Energy Consumption and Economic Growth Nexus in Pakistan

Abstract

The study explored the link between energy consumption and economic growth in Pakistan covering the period from 1980 to 2018. This study used an augmented production function and combined the two neo-classical and ecological points. Most important is that this study used three different proxies of energy to check whether the relationship is proxy specific or not in Pakistan. Furthermore, there are some controls in terms of trade and foreign direct investment to check the robustness of the relationship. The time series approaches as augmented dickey fuller (ADF) unit root test and ARDL bound test approach has applied. The results indicated the long-run positive relationship between energy and growth in Pakistan and the relationship is not proxy specific. Therefore, it has suggested enhancing energy efficient policies, better resource allocation for energy supply.