Transport Infrastructure, Energy Consumption and Economic Growth Triangle in India: Cointegration and Causality Analysis

Rudra Prakash Pradhan

doi:10.5539/jsd.v3n2p167

Abstract

The paper explores the nexus between transport infrastructure (road and rail), energy consumption (oil and electricity) and economic growth in India over the period 1970-2007. Using cointegration and Granger causality test, the paper finds a unidirectional causality from transport infrastructure to economic growth, a unidirectional causality from economic growth to energy consumption and a unidirectional causality from transport infrastructure to energy consumption. The paper at the end suggests that energy and transportation policies should recognize the transport- energy consumption- growth nexus in order to maintain sustainable economic growth in the country.

Highlights

Transport is an essential element of the modern society and key to sustained economic growth (Ramanathan, 2001; Banister and Berechman, 2001; Ramanathan and Parikh, 1999; Eisner, 1991)
The findings are very essential for the policy makers for enhancing the transport infrastructure in the economy for the benefit of energy consumption and economic growth
Understanding the nexus between transport infrastructure, energy consumption and economic growth is very vital in the effective design and implementation of transport policies and energy policies in the economy

Summary

Introduction

Transport is an essential element of the modern society and key to sustained economic growth (Ramanathan, 2001; Banister and Berechman, 2001; Ramanathan and Parikh, 1999; Eisner, 1991) Adequacy of this vital infrastructure is an important determinant of the success of a nation’s effort in diversifying its production base, expanding trade and linking together resources and markets into an integrated economy. It provides an insight with respect to the role of transportation on energy consumption and economic growth and provides a basis for discussion of energy and transportation policies in the economy.

Data Set and Econometric Methodology

Granger Causality Test

Results and Discussion

Conclusion