Energy consumption and GDP with the role of trade in South Asia

This study investigates the dynamic linkages between energy consumption, GDP and trade by using panel co-integration technique and panel Granger causality test, over the period 1980-2009 for South Asian economies. The empirical outcomes show that feedback relationship holds between energy consumption and GDP and between energy consumption and exports (trade) in the short run. There also exists unidirectional causal relation running from energy to imports (trade) in the short run while feedback relationship between these in the long run. Moreover, there is evidence of unidirectional causal relation running from export (trade) to energy in the long run. The main implications are that any shortage of energy supply will lessen the imports and exports of the countries directly and impede GDP growth indirectly.