The Dynamics of Electricity Consumption and Growth Nexus: Empirical Evidence from Three Developing Regions

Abstract

In this article, a panel of 45 developing countries for the 1971–2009 period is used to investigate the dynamic relationship between electricity consumption and economic growth. We employ the system generalised method of moments (system GMMs) approach proposed by Blundell and Bond (1998), which is an information-efficient means of obtaining consistent coefficient estimates. Our result suggests a positive relationship between electricity consumption and economic growth when the full panel is estimated. Regional analysis suggests a positive growth–electricity nexus for Asia and the Pacific and the sub-Saharan African region, although the size and significance levels are different. We do not find any statistically significant relationship between electricity consumption and economic growth in Latin America and the Caribbean. JEL Classification: Q43, O13, O44, C23