Energy consumption, export performance and economic growth in a landlocked developing country: The case of Nepal

Abstract

This paper examines the short-run and long-run relationship between energy consumption, export performance, and economic growth in a landlocked developing country, Nepal, from 1980 to 2018. We employ an Autoregressive distributed lag (ARDL) bounds testing approach to co-integration to investigate the relationship and role of energy consumption and exports on economic growth. The estimated results confirm the existence of a long-run relationship between economic growth and its regressors. The empirical estimation indicates the presence of a positive and statistically significant impact of exports on economic growth. Energy consumption and economic growth are positively associated; however, the coefficient is not statistically significant. Using the Granger Causality approach, the causality test reveals that there is unidirectional causality from energy consumption to economic growth, economic growth to export, and energy consumption to export.