Dynamics Dynamics of Energy Consumption, Technological Innovations and Economic Growth in Pakistan

Dynamics of Energy Consumption, Technological Innovations and Economic Growth in Pakistan

Abstract

The objective of this study is to investigate the impact of technological
innovations (TI henceforth) on energy use at aggregate and disaggregate
levels for the economy of Pakistan. Using an extended Marshallian demand
function this study fails to confirm the negative relationship between TI and
energy use over the period 1971-2013 through autoregressive distributed lag
(ARDL) bound testing approach. This might be due to the reason that the
introduction and adoption of new and efficient technologies has created
further energy demand in the system through broadening of the consumer
base. At the disaggregated level, while TI has put an upward pressure on
natural gas and coal consumption, nonetheless, it has significantly improved
efficiency in the oil sector, thereby reducing oil demand in the long-run. It
has also been found that energy demand is price and income inelastic in the
long-run. However, an increase in per capita GDP is positively associated
with energy demand in the short-run. Improvement in country’s
competitiveness captured through trade openness, has proven to be one of
the important determinant of energy demand in the long-run.