Energy Consumption, Economic Growth Relationship and Causal Independence: Evidence from Panel Data Forselected Low Income Countries

Abstract

This paper uses the panel data of energy consumption (EC) and economic growth (GDP) for 8 countries from 1975 to 2010. These countries are divided into two groups: selected low income country in Asiaand selected low income country in Africa. A long run relationship was found to exist betweenenergy consumptionandeconomicgrowthisinvestigatedby employing Wadalla and Wu (1999) panel cointegration method. Panelcausalitytestisappliedtoinvestigatethewayofcausalitybetweentheenergyconsumptionandeconomic growth which shows that causality runs from GDP to economic growth for Africa and a reverse of that was observed for the selected countries in asia.The findings of this study have important policy implication sand it shows that this issue still deserves further attention infuture research.

Keyword: Energy consumption, economic growth, panel analysis, cointegration