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Energy Dependence in Developing Countries: Does the Level of Income Matter?

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  • Nicholas Odhiambo
Abstract
This paper re-examines the causal relationship between energy consumption and economic growth in four developing countries. The four countries include two lower-middle income economies, Ghana and Cote d’Ivoire, and two upper-middle income economies, Brazil and Uruguay. The study attempts to answer one critical question: Is the causal relationship between energy consumption and economic growth sensitive to a country’s level of income? In order to account for the omission-of-variable bias, the study incorporates exports as an intermittent variable between energy consumption and economic growth—thereby creating a simple multivariate model. Using the auto-regressive distributed lag (ARDL)-bounds testing procedure, our results show that while energy consumption Granger-causes economic growth in upper-middle income countries, in lower-middle income countries it is economic growth that drives energy consumption. Copyright International Atlantic Economic Society 2014

Suggested Citation

  • Nicholas Odhiambo, 2014. "Energy Dependence in Developing Countries: Does the Level of Income Matter?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 42(1), pages 65-77, March.
    • Handle: RePEc:kap:atlecj:v:42:y:2014:i:1:p:65-77
    DOI: 10.1007/s11293-013-9402-2
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    More about this item

    Keywords

    Developing countries; Energy dependence; Economic growth; Q43; C32; O40;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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