The Relationship between Economic Growth, Energy Consumption and Carbon Dioxide Emissions: Evidence from Central Asia

Anh Tru Nguyen

doi:10.17015/ejbe.2019.024.01

Abstract

This article aims to explore the relationship between economic growth, energy consumption and CO2 emissions of five Central Asian countries between 1998 and 2017. We found that per capita energy consumption has a positive relationship with per capita GDP, while per capita CO2 emissions negatively affect per capita GDP in Central Asia. Further, per capita GDP has a negative impact on per capita energy consumption in the region. Results reflect that the economic growth of Central Asian countries still heavily depends upon energy consumption. However, CO2 emissions in this region should be reduced because it has been defined as a determinant leading to a decrease in economic growth. In the short run, we also found that there is a directional relationship running from per capita GDP to per capita energy consumption and per capita CO2 emissions; and from per capita energy consumption to per capita GDP. Results show that there is a co-integration among variables in the long run. Finally, policies are recommended to enhance economic growth and achieve sustainable development in Central Asia.

Highlights

In the past 25 years, since achieving independence from the Soviet Union, Central Asia includes five culturally and ethnically diverse countries that have followed different paths to political and economic transformation
We found that per capita energy consumption has a positive relationship with per capita gross domestic product (GDP), while per capita CO2 emissions negatively affect per capita GDP in Central Asia
Results reflect that the economic growth of Central Asian countries still heavily depends upon energy consumption

Summary

Introduction

In the past 25 years, since achieving independence from the Soviet Union, Central Asia includes five culturally and ethnically diverse countries that have followed different paths to political and economic transformation. After more than a decade of growth relied on hydrocarbon booms, Central Asian countries are facing obstacles related to decreasing commodity prices, declining trade and lower migrant remittances (Batsaikhan and Dabrowski, 2017). The economic growth of Central Asian countries is predicted to reach 3.1 percent in 2017 and accelerated to 4.1 percent in 2018, but each country grows at different rates. Central Asia’s economy heavily depends upon international prices for energy and metals, which attracted foreign direct investment into oil and gas extraction industries and transport infrastructure (ADBI, 2014)

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