Examining the Relationship between Rural and Urban Populations’ Access to Electricity and Economic Growth: A New Evidence

Abstract

The electric power industry has a dominant contribution to economic development in China, and growth in the industry needs to help the economy grow, protect the environment, and give people access to electricity. The current study’s main goal is to assess the rural and urban populations’ access to electricity, energy use, and economic development in China using yearly data ranging from 1995 to 2017. We applied two unit root tests to check the variables’ stationarity and a symmetric autoregressive distributed lag (ARDL) approach to discover the variable links using long-run and short-run estimates. The Granger causality test was also used in this study under a vector error correction model (VECM) to assess the variables’ unidirectional connection. Short-run results demonstrate that total population access to electricity, urban population access to electricity, and energy use have positive links with economic development, with probability values of (0.004), (0.000), and (0.007), respectively. Similarly, long-run evidence shows that variables such as total population access to electricity, urban population access to electricity, and energy use have a positive relationship with economic growth, with p-values of (0.005), (0.000), and (0.047), respectively. Unfortunately, throughout the investigation, the variable electricity availability to the rural population demonstrated an adverse relationship with China’s economic growth. Furthermore, the Granger causality test results under the vector error correction model (VECM) show that all variables have unidirectional links. China’s implementation of new plans regarding energy consumption has a significant impact on both future energy supply and the country’s ability to stay sustainable. It will be able to maintain the stability of its energy levels as long as it sticks to suitable choices and policy options. Undoubtedly, China is a huge user of energy and an emitter of CO2 emissions; therefore, possible conservative strategies and policies are required from the Chinese government to use clean energy sources to fulfill its energy demand.