Petroleum consumption and economic growth: evidence from China and some South Asian countries

Article type: Research Article

Authors: Ghosh, Sajal

Affiliations: Assistant Professor, Management Development Institute, Mehrauli Road, Sukhrali, Gurgaon–122 001, India

Note: [] Tel +91 124 4560309; Fax +91 124 2341189. Email [email protected], [email protected]

Abstract: The study probes cointegration and Granger causality between economic growth and petroleum consumption, using annual data covering the period 1980–2004, for Bangladesh, Bhutan, Burma, China, Maldives, Nepal, and Pakistan in a bivariate vector autoregression framework with change in international oil price as exogenous variable. Augmented Dickey-Fuller tests reveal that all the series are non-stationary in nature. Existence of long-run equilibrium relationship has been established between economic activity and petroleum consumption in Bangladesh, Bhutan, China, and Pakistan. Unidirectional long-term causality running from economic growth to petroleum consumption has been found to exist for Bangladesh, Bhutan, and China while long-run bi-directional causality has been found for Pakistan. For countries like Maldives and Nepal, though series are found to be non-cointegrated, there exists bidirectional short-run causality between economic growth and petroleum consumption. For Burma, no causality is found in either direction. The study also highlights the implications of the results and, finally, suggests some policy prescriptions based on empirical findings, which are country-specific.

DOI: 10.3233/RED-120055

Journal: Journal of Resources, Energy and Development, vol. 6, no. 1, pp. 1-8, 2009