An Empirical Study Of The Relationship Between Energy Consumption And Economic Growth In Yangtze River Delta

Energy is an important driving force to promote the progress of human society.Since reform and opening, along with the rapid economic growth, China’s energy consumption has been rising, and become the world’s largest energy consumer in 2010.As one of the most important part in China’s economic map, the Yangtze River Delta region is also facing such an acute energy problem. So a correct understanding of the relationship between energy consumption and economic growth, can lay a solid foundation for the sustainable development in future.In this article, we will use the qualitative and quantitative analysis to have a comprehensive and detailed looking at the relationship between energy consumption and economic growth in the Yangtze River Delta. In the qualitative analysis part, we analysis the GDP, energy consumption, energy intensity and energy consumption elasticity coefficient in statistical by using the related data from 1985 – 2013, and compared with the national level. The results show: in the past three decades, the Yangtze River Delta’s economic growth and energy consumption growth in terms of both faster than the national level; energy consumption intensity showed a continued downward trend, and always below the national level; energy consumption elasticity coefficient slightly higher than the national average, but in recent years gradually stabilized at a lower level. In the quantitative analysis of this article first we use the cointegration theory and the impulse response method to analyze the Yangtze River Delta’s time series data from 1985—2013. The results show that there is a long-term equilibrium between economic growth, labor, capital and energy, cointegrating vectors show the production elasticity of labor, capital and energy consumption were 0.30, 0.54 and 0.49. At also there is a both-way Granger causality relationship between economic growth and energy consumption. Impulse response function and variance decomposition shows that economic growth and energy consumption will have long-term positive effect on each other, the difference is the impact of economic growth on energy consumption is immediate, but the impact of energy consumption on economic growth is hysteresis. The second part of Quantitative analysis is spatial panel analysis with the panel data of the 25 cities in Yangtze River Delta. The conclusions show that there is a spatial dependency in Yangtze River Delta region, and the production elasticity of labor will rise while the production of energy and capital elasticity will decline if we put the spatial effect into consideration, and the total factor productivity reflects that some citieshave over-concentrated.