Energy Use for Economic Growth: Cointegration and Causality Analysis from the Agriculture Sector of Pakistan

Abstract

Productivity is closely associated with direct and indirect use of energy as an input. The importance of energy can not be denied as one of the basic inputs to economic growth process. The consumption of energy has been among the critical indicators of the level of development of any country. It is observed that usually the developed countries use more energy per unit of economic output and far more energy per capita than developing countries. This reflects the adoption of increasingly more efficient technologies for energy production and utilisation as well as changes in the composition of economic activities. This, largely, needs a shift in energy use [Cheng and Lai (1997)]. When this shift in the composition of final energy use is taken into account energy use and the level of economic activity are found to be tightly coupled. The prospect of large reduction in the energy use intensity of economic activity seems limited. So, the accelerated demand results in the scarcity of energy and increasing cost have severe implications for economic growth. This ever increasing role of energy in the present day scenario underlines the need to increase the supply of energy and to find some new alternative energy sources and energy conservation techniques