Globalization and politico-administrative factor-driven energy-growth nexus: A case of South Asian economies

Islam, M. M.; Islam, M. S.

In modern days, economic growth is energy-dependent and vice versa. Earlier studies concentrated a bit to analyze the influence of globalization and politico-administrative factors on the energy consumption-economic growth nexus in developing economies. The motivation for the current research is to scrutinize the energy consumption-economic growth nexus while accounting for the influence of globalization and country risk indicators—the politico-administrative factors in a panel of 4 South Asian countries (Bangladesh, India, Pakistan, and Sri Lanka) during 1980–2018. To check the issues of heterogeneity and cross-sectional independence, the study employs the pooled mean group estimation method. The investigated results provide a nexus between energy consumption and economic growth where globalization - a long-run force positively affects this nexus in the long run and negatively in the short run. Besides, the politico-administrative factors have an adverse impact in the long run and an insignificant effect on this nexus in the short run. The Dumitrescu–Hurlin non-causality test establishes the feedback hypothesis concerning energy consumption-economic growth nexus in South Asian economies. The study results remain robust across the dynamic ordinary least square estimator. Therefore, this study suggests sustaining the energy-growth nexus to properly handle globalization and politico-administrative and the Covid-19 pandemic issues through institutional quality. Moreover, the objective-oriented policies are critical to strengthening the energy-growth nexus without decaying environmental quality in South Asian countries. © 2021 John Wiley & Sons Ltd.