A Study On The Relationship Between Energy Consumption And Economic Growth Based On The Empirical Research

As an essential material basis for human survival, social progress and economic development, energy plays an important role in the economic & social development as well as living standard improvement around the world. However, from another perspective, the rising energy demand due to fast-growing economy has resulted in conflict between the growing energy demand and scarcity of energy itself. Therefore, it is theoretically and practically significant for the global long-term healthy social &economic development to correctly understand and deal with the relationship between energy consumption and economic growth.Since the reform and opening up in 1978, China's economy has gained great success, growing at the rate of ten percent in average, from more than 3,000 billion RMB before the reform to more than 30 trillion RMB by the end of 2009. With the deepening reform and the accelerating process of industrialization and urbanization, China's economy may continue to maintain a comprehensive and rapid growth for a longer period in the future. To support such a rapid, comprehensive and healthy economic growth, we have to input considerable elements, including energy, as indispensable basis for economic growth. Therefore, there is an interdependence and mutual restraint relationship between energy consumption and economic growth. As the different Granger causality relationships between energy consumption and economic growth have different policy indications, in order to work out the scientific, rational energy policy and industrial policy for a country or a region, we need to study the relationship between energy consumption and economic growth carefully. For this reason, this dissertation conducts a systematic research focusing on the relationship between energy consumption and economic growth.This dissertation firstly introduces the research status and related theoretical background at home and abroad, and in the following, using empirical research methods such as the time series analysis and panel data econometric methods, it studies the relationship between energy consumption and economic growth at different levels: China as a whole, inter-provincial inside China and cross-border in the world, and getting reasonable empirical findings and policy recommendations. Finally, conclusions of the theoretical and empirical research have been summarized and the future research potential has been examined. Through building up the theoretical model and empirical analysis, the main conclusions and innovation of this dissertation can be summerized as:â‘ Different to the traditional study of the relationship between Chinese GDP (in total) and energy consumption, this dissertation discusses the relationship between the components of GDP calculated by expenditure approach and energy consumption. The empirical analysis shows that there is unidirectional Granger causality from energy consumption to consumption and investment in both the long and short term. Therefore, it requires more energy supply varieties, expanding energy supply channels and the new energy exploitation, in order to promote China's consumption and investment. Compared with previous similar studies, this research is more detailed and clear, and draws some more targeted empirical conclusions and policy recommendations. In addition, for empirical research, based on actual situation of Chinese Statistical Yearbook, we have re-examined rigorously on the data of energy consumption and economic growth, and selected a more accurate time span of data, and arrived at some reasonable empirical conclusions and policy recommendations.â‘¡According to the latest economic zoning method by the State Council Development Research Center (2008), this dissertation changes the traditional zoning approach of"eastern, central and western"into"eight economic regions"of China. This dissertation studies the relationship between energy consumption and economic growth of the eight economic regions. After the relevant empirical analysis, the results show that: 1)In long-run, with respect to The region of Northeast,North coast,South coast and The middle region of Yellow River, there is bidirectional causality between energy consumption and economic growth. The middle region of Yangtze River and The region of Northwest, there is unidirectional causality from economic growth to energy consumption. In the Southwest region, there is unidirectional causality from energy consumption to economic growth. 2)In short-run, there is no causality with energy consumption and economic growth in the region of Northeast and Southwest. there is unidirectional causality from economic growth to energy consumption in the region of North coast, the middle Yangtze River and Northwest. There is unidirectional causality from energy consumption to economic growth in the region of South coast and the middle region of Yellow River. Whether in long or short term, the relationship between energy consumption and economic growth of the region of eastern coast can not tell. Using this Zoning method of"eight economic regions"based on our actual situation of regional economic development to study the relationship between energy consumption and economic growth is quite new. Therefore, the empirical conclusions and policy recommendations drawn from the study are more innovative and targeted.â‘¢Taking the differences of regional energy (resource) endowment into account, we divide the areas into"the provinces of energy import"and"the provinces of energy export", and then conduct an empirical research on the relationship between the region's energy consumption and economic growth according to the different energy (resource) endowments. The previous studies on the relationship between regional energy consumption and economic growth are mostly approached in accordance with the administrative establishment (divisions), and this dissertation fully takes the differences of regional energy (resource) endowment into account, and divides the areas into"the provinces of energy import"and"the provinces of energy export", to study on the relationship between the energy consumption and economic growth respectiveiy. The results show that: 1) For the provinces of energy import, there is unidirectional Granger causality from economic growth (GDP) to the energy consumption in long-run, and there is bidirectional Granger causality with energy consumption and economic growth (GDP) in short-run. 2) For the provinces of energy export, since this section taking different variables into account(ie,"based on two variables"and"based on production function"(multi-variable)), what results in the different relationship between energy consumption and economic development. Finally, this dissertation presents some targeted policy recommendations to the provinces of energy import and the provinces of energy export respectively.â‘£The study on the relationship between"cross-border energy consumption and economic growth"is different from the previous studies based on geographical distribution to selecte countries. This dissertation selectes the OECD countries to represent the major developed countries and the BRICS countries to represent the major developing countries to have a comparative study between them. By the empirical analysis on the"cross-border relationship between energy consumption and economic growth", the results show that: In the short term, there is unidirectional Granger causality from economic growth to energy consumption in OECD countries, and there is unidirectional Granger causality from energy consumption to economic growth in the BRIC countries. In the long term, there are no long-run equilibrium relationship in both OECD countries and BRIC. Finally, this paper puts forward some targeted policy recommendations based on the empirical conclusions.In short, this dissertation has conducted a systematic study on the relationship between energy consumption and economic growth in accordance within the logic of the"China - Provinces - cross-border"frame, and obtained some targeted policy recommendations through reasonable empirical analysis.