The energy-growth nexus revisited: the role of financial development, institutions, government expenditure and trade openness

Abstract

Although the energy-growth nexus has been widely investigated in the last several decades, there are still vivid debates in the energy economics field. This study evaluates the link between energy consumption and economic growth with the thorough assessment of the roles of institutional quality, government expenditure, financial development and trade openness in 46 Emerging Market and Developing Economies (EMDEs) from 1990 to 2014. By employing appropriate panel econometric techniques, cross-sectional dependence and slope heterogeneity are controlled, which helps explore the unbiased long-run effects of the determinants of economic growth as well as scrutinize the dynamic relationship among variables. The findings demonstrate that energy usage, gross fixed capital formation, government expenditure, financial development and trade openness positively and significantly impact the economic growth in the studied EMDEs. Moreover, Dumitrescu and Hurlin causality tests affirm the occurrence of feedback hypothesis in the connection between energy consumption and other variables including economic growth. Thus, it implies that energy consumption and economic growth are interdependent, which forms a basis for policy-makers to design effective energy and environmental policies. Toward the sustainable development goal, the author recommends the governments of EMDEs to contemplate the importance of finance-governance-trade relationship to economic growth alongside the implementation of energy-efficient policies.

Renewable Energy Use and Ecological Footprints Mitigation: Evidence from Selected South Asian Economies

“…Thus, these panel regression estimators are not applicable for handling cross-sectionally dependent panel datasets, as in this current study. Therefore, following Nathaniel and Iheonu [82] and Le [83], the AMG estimator of Eberhardt and Teal [25] is used to predict the long-run elasticities of per capita EF. This method is robust in accounting for both CSD and slope heterogeneity concerns in the data.…”

Public policies and tax evasion: evidence from SAARC countries

“…Following the study of Le (2020), the present study run Pesaran (2004) cross-sectional dependence test, a modified version of the LM test. Since a cross-country investigation can interact with each other within the economic-social network; it may lead them to a cross-sectional dependence which in turn makes bias the estimation outcomes (Le, 2020). We recorded the presence of cross-sectional independence in our study.…”

International trade and economic growth in Africa: The role of the digital economy

“…As a result, several empirical studies have been undertaken by researchers to determine the effect of international trade on economic progress in Africa and the rest of the continents. On the one hand, some of the empirical studies have shown positive effects of international trade on economic growth (Ades & Glaeser, 1999;Badinger & Breuss, 2008;Brini et al, 2017;Doan, 2019;Frankel & Romer, 1999;Gokmenoglu et al, 2015;Grossman & Helpman, 1990;Kumar, 2012;Le, 2020;Manwa & Wijeweera, 2016;Nkikabahizi et al, 2018;Van Den Berg, 1997;Zahonogo, 2017). On the other hand, some scholars reported negative or inconclusive impact of international trade on economic growth in Africa and the rest of the world (Cerdeira Bento & Moutinho, 2016;Manwa et al, 2019;Menyah et al, 2014;Mullings & Mahabir, 2018;Polat et al, 2015;Rahman & Mamun, 2016;Zheng & Walsh, 2019).…”