Electricity consumption, economic growth and trade openness in Kazakhstan: evidence from cointegration and causality

Abstract

Abstract We investigate the relation between electricity consumption and economic growth by incorporating trade openness, capital and labour in production function of Kazakhstan using annual data for 1991–2014. We apply the autoregressive distributed lag bounds testing and the VECM Granger causality approach to examine long‐run and causality relation between the variables. Our results confirm the existence of a long‐run relation among the series. The empirical evidence reveals that electricity consumption adds in economic growth. Trade openness stimulates economic growth, and capital and labour promote economic growth, as well. The causality analysis shows that electricity consumption Granger causes economic growth and trade openness. We also document feedback effect between trade openness and economic growth. Our study provides new insights for policymakers to articulate a comprehensive economic, trade and energy policy to sustain long‐run economic growth in Kazakhstan.