Does economic growth spark efficiency? Unveiling the Electricity Kuznets Curve (ELKC) in ASEAN-5 nations

Abstract

We contribute to the conventional Environmental Kuznets Curve literature by modeling the relationship between income and electric power consumption among five Asian economies (ASEAN-5): Indonesia, Malaysia, the Philippines, Singapore, and Thailand. Economic growth together with rapid urbanization contributes to increases in electricity use. Still, it is not clearly understood whether and to what extent improvements in technology could ultimately allow a more efficient use of power. We test whether electricity consumption follows an inverted U-shape curve (Electricity Kuznets Curve, ELKC) using the unrestricted error correction model fitted on historical data for each country. The long-run results indicate that the ELKC hypothesis is detected in Indonesia, the Philippines, and Singapore. Our results suggest that if these countries continue to follow the ELKC trajectory, further increases in income could facilitate energy-efficiency innovations to prevent a monotonic relationship between growth and electric power use. The finding implies that there is room for policies to incentivize energy efficiency measures in multiple sectors.