Energy consumption, technology innovation and economic growth nexuses in Malaysian

Abstract

Industry and agriculture in Malaysia are the main contributors to economic growth and employment. These sectors also play an important role in Malaysia's total exports. The question then is whether technological innovation, sectoral output, and exports growth have had a real impact on these two sectors, which are very important for policy-making. This paper attempts to empirically identify such relations using econometric methods, including an autoregressive distributed lag (ARDL) bounds testing method and a dynamic ordinary least squares (DOLS) during 1978–2018. The results confirmed that overall long-run economic growth is the main contributor to the increase in energy consumption with a greater magnitude than in the short-run. In the long-run, an increase of 1% in economic growth leads to an increase of 4.6% and 1.1% in energy demand in agriculture and industrial sectors, respectively. Exports are the second largest contributor to energy demand in the overall economy and the agriculture sector. Finally, the technological innovation that enhances energy efficiency is only effective in reducing energy consumption in the industrial sector, which ultimately reduces emissions.