Non-Linearity Effect of Energy Consumption on Economic Growth: Panel ASEAN-4 Countries

Jerome Kueh,Audrey Liwan,Yong Sze Wei,Josephine Yau

doi:10.6007/ijarbss/v10-i8/7642

Abstract

The aim of the study is to investigate the impact of energy consumption on economic growth in ASEAN-4 countries as a whole. In addition, the effect of the non-linearity of the relationship between energy consumption and growth is examined using Threshold Analysis method for the period of 1980 to 2014. Empirical findings indicate that energy consumption has significant positive impact on economic growth in ASEAN-4 countries in the long-run. Furthermore, the non-linearity results show that the impact of the energy consumption on growth become greater when the energy consumption is above the threshold level. This implies that more usage of energy may contribute to the economic growth.

Highlights

Energy demand remain as critical issue in the developed and developing countries, especially in Association of Southeast Asian (ASEAN) region due to the need of energy for development purpose
This study intends to examine the impact of energy consumption on economic growth in ASEAN-4 countries as a whole
Empirical results show that energy consumption has significant positive impact on economic growth in the panel ASEAN-4 countries

Summary

Introduction

Energy demand remain as critical issue in the developed and developing countries, especially in Association of Southeast Asian (ASEAN) region due to the need of energy for development purpose. There is an increasing trend of energy consumption for Malaysia and Thailand. Prior to the 1997 Asian Financial crisis, the energy consumption in Malaysia recorded approximately 2,065 kg of oil in 1997 and declined to approximately 1,892 kg of oil in 1999. There was a reduction in the energy consumption aftermath 1997 Asian Financial crisis, the energy consumption in both countries exhibit any increasing trend and reached approximately 3,003 kg of oil and approximately 1,969 kg of oil, respectively, in 2014. The energy consumption trend in Philippines exhibits minor changes with approximately kg of oil in 1980 to approximately kg of oil in 2014

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Conclusion