The Effect of Electricity Generation, Thermal Energy Production, Fixed Capital Investment, and Consumer Price Index on Economic Growth in Kazakhstan

Abstract

Many local and global factors affect the growth of national economies. Among these factors, energy production is one of the main sources of economic growth. This study examines the impact of energy production, especially electricity generation and thermal energy production, on economic growth in Kazakhstan. To provide a better explanation for the effect of energy production on economic growth, we also included fixed capital investment and consumer price index variables in our research model. Thus, economic growth data, fixed capital investments, consumer price index, electricity generation, and thermal energy production are determined as research variables. Research data were obtained from the databases of the World Bank and the National Bureau of Statistics of the Republic of the Agency of Strategic Planning and Reforms of Kazakhstan. The data range is from 2002 to 2020. The findings showed that fixed capital investment has the most dominant effect on economic growth. This is a natural result from a macroeconomic point of view. Another critical finding is that both electricity generation and fixed capital investments have a positive effect on economic growth. When the variable of the amount of electricity generated is included in the model, the explanatory power of the model increases from 85% to 90.7%. However, the effect of thermal energy production was found to be statistically insignificant. This insignificance is a research problem that needs to be analyzed in detail, taking into account the general energy production structure of Kazakhstan.