Investigation of the Relationship Between Energy Consumption and Economic Growth of Industry Sector in International Law

Abstract

Efficient exploitation of energy resources and saving energy carriers, particularly in the industry sector are crucial cases. Therefore, identification of the type of relationship between energy consumption and growth in industrial products is necessary to achieve this goal. Regarding the close relationship between energy consumption and the economic growth of the industry sector in International Law, this study investigates the long-run relationship using the Autoregressive Distributed Lag (ARDL) model. Also, it examines the Granger causality between energy consumption in the industry sector and the economic growth of this sector during 1981-2017. The results of the ARDL model indicate that all coefficients are significant at the confidence level of 95%. The results show that employment in the industry sector has a positive and significant effect on the economic growth of the industry sector during the long term in Iran. Energy consumption in the industry sector has a positive and significant impact on the economic growth of the industry sector in the long term in Iran. Also, the capital of the industry sector has a positive and significant impact on the economic growth of the industry sector in the long term in international law.

Moreover, results suggest that energy consumption of the industry sector is not Granger causality for the economic growth of this sector, and this hypothesis is rejected. However, the second hypothesis (economic development of the industry sector is not the Granger causality for energy consumption) cannot be rejected. There, there is unidirectional Granger causality from energy consumption of the industry sector towards economic growth of this sector. Considering the unidirectional Granger causality from energy consumption in the industry sector towards the economic growth of this sector, it is concluded that an increase in energy consumption drives economic growth.