An investigation of the relationship between economic growth and electricity consumption with different industrial structures in different regions in China

Abstract

Since the late 1970s, the investigation of relationship between economic growth and energy (electricity) consumption has been carried on and it has become an research focus in recent years. This study classified 28 China provinces into three parts according to different industrial structures. Dynamic error correction model is presented to investigate the relationships and directions of causality between electricity consumption and economic growth of each area. The empirical results show that there are co-integration relationships between electricity consumption and economic growth in the whole country and a unidirectional causality running from electricity consumption to economic growth in the long run. However, in the short term, there are different relationships between electricity consumption and economic growth in different areas because of different industrial structures. In the high secondary industry share of GDP area, there is the bidirectional causality between electricity consumption and economic growth. Nevertheless, a unidirectional causality runs from economic growth to electricity consumption in the area with low secondary industry share of GDP. Empirical results indicate the difference of correlation between electricity consumption and economic growth in different regions and this should be taken into account in the design of regional energy policies.