The Relationship between Energy Input and Economic Development: Latest Evidence from China

Abstract

China’s energy consumption, energy production and economic production have all experienced fast growth over the past few decades. Previous research suggests a possible causal relationship between economic growth and energy consumption, but no enough empirical evidences were provided. Therefore, this research intends to evaluate the relationship between energy input and economic development, using China’s latest data and by means of elasticity and statistical tests. Conclusions drawn from the results suggest that there is a varying positive correlation between energy and economic development; China’s energy efficiency has improved while the dependency of China’s economy on electricity has increased in recent years; there is a unidirectional causality from economic growth to energy consumption and a unidirectional relationship from economic growth to coal consumption. This paper provides comprehensive information on the relationship between China’s energy input and economic development, which can be useful for policy makers and researchers.

Keywords: Energy consumption, Economic development, Causality