Electricity Generation and Real Output in Asia: A Panel Co-Integration Approach

Abstract

Purpose: The present study concentrates on the relationship of electricity with real output in Asia. The paper analyzes this connection individually among all regions of Asia. Some countries are selected from Central Asia, East Asia, South Asia and South East Asia. Time period of 1990 - 2015 has been chosen for the analysis. We have considered Solow growth model and have taken labor and capital as necessary variables for growth. After confirmation of integration of order as 1 for all variables, Kao Co-integration test infers presence of long run relationship in all models. FM-OLS suggests that labor and capital are positively significant factors for the development of real output in all the regions of Asia. Electricity Production is positively influencing real output in Central Asia, South Asia and South East Asia; For East Asia, it has been stated as negative. On the basis of results, study suggests that government should develop more skilled labor, cheap investment opportunities, efficient and cheap electricity production.