The Relationship Between Energy Consumption, Globalization, and Economic Growth: A Causality Analysis for Selected Emerging Market EconomiesÖmer Fazıl Emek, Melike Atay Polat
This study aims to examine the relationship between non-renewable and renewable energy consumption, separated by energy types, globalization, and economic growth, for 15 emerging market economy countries from 1990-2018. Panel data analysis techniques were used to detect the existence of any relationship between these variables. According to the findings obtained from a Dumitrescu and Hurlin (2012) causality test, it has been determined that there is bidirectional causality between (i) renewable energy consumption and economic growth, (ii) non-renewable energy consumption and economic growth, and (iii) globalization and economic growth. This result supports the thesis that energy is an important input of economic growth arising from production and service activities in emerging market economy countries, which are taken as a sample, and that economic growth as a result of economic activities also increases energy consumption. In addition, the increasing globalization trend in these countries triggers economic growth, and economic growth triggers more globalization.
Enerji Tüketimi, Küreselleşme ve Ekonomik Büyüme Arasındaki İlişki: Seçilmiş Yükselen Piyasa Ekonomileri İçin Bir Nedensellik AnaliziÖmer Fazıl Emek, Melike Atay Polat
Yapılan bu çalışmanın amacı, enerji türlerine göre ayrıştırılan yenilenemez ve yenilenebilir enerji tüketimi, küreselleşme ve ekonomik büyüme ilişkisini 1990-2018 yılları arası yükselen 15 piyasa ekonomisi ülkeleri için incelemektir. Bu değişkenler arasında herhangi bir ilişkinin varlığını tespit etmek adına panel veri analizi teknikleri kullanılmıştır. Dumitrescu ve Hurlin (2012) nedensellik testinden elde edilen bulgulara göre (i) yenilenebilir enerji tüketimi ile ekonomik büyüme (ii) yenilenemez enerji tüketimi ile ekonomik büyüme ve (iii) küreselleşme ile ekonomik büyüme arasında çift yönlü nedenselliğin varlığı tespit edilmiştir. Örneklem olarak ele alınan yükselen piyasa ekonomisi ülkelerinde enerjinin, gerçekleştirilen üretim ve hizmet faaliyetlerinden doğan ekonomik büyümenin önemli bir girdisi olduğu, aynı zamanda ekonomik faaliyetler sonucunda ortaya çıkan ekonomik büyümenin de enerji tüketimini artırdığı tezini desteklemektedir. Ayrıca bu ülkelerde artan küreselleşme eğilimi ekonomik büyümeyi, ekonomik büyüme de daha fazla küreselleşmeyi tetiklemektedir. Genel olarak bu çalışmadan türlerine göre enerji tüketimi, küreselleşme ve ekonomik büyümenin birbirlerinin nedeni ve sonucu olduğu yönünde bir çıkarım yapmak mümkündür.
In the last two centuries, the world has gone through a period in which attempts to achieve economic, social, and political integration have been made, and international trade, cultural changes, and political integration have been experienced more than ever before. For this reason, the role of globalization in economic growth and development is considered among the important topics in the literature. In this respect, it is important to evaluate the energy consumption-economic growth relationship in the context of globalization and clarify the influence channels between these variables.
The aim of this study, which is based on these approaches, is to handle the question of whether energy consumption, globalization, and economic growth are related to each other. This study examines the causality relationship between renewable and non-renewable energy consumption, globalization, and economic growth between 1990 and 2018 in 15 emerging market economies that need globalization and increased energy use to achieve a high growth rate.
Although the effect of fossil-based energy use on growth has been discussed for many years, it has frequently been found that renewable energy sources have been included in recent models. With this in mind, both renewable and non-renewable energy consumption were added to the model of the study as variables. Another variable considered in the model is the globalization index. Dreher (2006), based on the idea that globalization has social and political characteristics in addition to its economic nature, first created a composite index that includes economic, social, and political elements to measure globalization. The globalization index, which was developed at various stages, was based on these three dimensions. Other variables included in the model are GDP, labor, and capital, which represent economic growth.
In the literature, it is seen that many empirical studies have been conducted based on different models and produced from the variables of energy consumption, globalization, and economic growth. These studies, which are generally based on (i) energy consumption and economic growth, (ii) globalization and economic growth, and (iii) energy consumption and globalization relations, vary according to the way the subject is handled. In some studies, the effects of variables on economic growth, and in some studies, the effects on energy consumption have been taken into account. While the effects of non-renewable energy sources are mainly taken into account in the energy consumption variable, recent studies also take into account the effects of renewable energy sources. In the literature, the dimensions of globalization have been shaped over time. In earlier studies, trade and foreign direct investments were used as proxies of globalization, but the necessity of emphasizing not only the economic aspect of globalization but also its social and political dimensions made the globalization variable a multidimensional index that also includes economic, social, and political elements.
In this study, in which panel data techniques were used, it was determined that there is a bidirectional causality relationship between both renewable and non-renewable energy consumption and economic growth, according to the findings obtained from the Dumitrescu and Hurlin (2012) causality test. This finding confirms the “feedback hypothesis” in the theoretical literature. Another finding is that there is a bidirectional causality relationship between globalization and economic growth.
These findings show that generally renewable and non-renewable energy consumption, globalization, and economic growth are the causes of each other. The economic growth that emerges as a result of the production activities carried out in the specified period for the 15 emerging market economies also needs the energy input used in these production activities to a large extent, and the energy input used also increases the output and triggers economic growth. The ability of these emerging market economies, which have an average income of 8,500 dollars, to reach the levels of developed countries depends on their rapid economic growth. In this case, it is possible to predict that fossil-based energy consumption will continue. However, it is essential for sustainable economic growth that these countries switch to renewable energy by supporting the sectors operating in the field of green and clean energy. Fossil-based energy sources have a certain period of use.
At the same time, this study supports the idea that globalization is also related to economic growth. From this point of view, it would not be wrong to say that integrations in economic, social, and political fields establish a tight network with economic growth and energy consumption. The policy proposal that can be drawn from this study is to continue to consume non-renewable energy at certain levels - for continued economic growth- provided that the weight of use of renewable energy is increased in a planned and gradual way in emerging market economies.