A Comparison of the Relationship Between Electricity Consumption and Gross Domestic Product According to Development Status of Countries

Abstract

Electricity is a requirement for the economic, social and cultural progress for all developed, developing and under-developed countries. This paper examines the relationships between electricity consumption and gross domestic product in 30 countries, using data for the period 1995–2014. These countries are classified according to their developmental status. Widely used tests for the panel unit root, heterogeneous panel cointegration, and panel-based error correction models were employed. The empirical results indicate that electricity consumption and economic growth appear to be cointegrated. The long -run and short-run relationships are estimated using suitable estimations. The results show that the developmental levels of countries differ in their impact on the relationship between electricity consumption and GDP.