ENERGY CONSUMPTION, ECONOMIC GROWTH AND DEVELOPMENT FINANCE: EVIDENCE FROM THE MIDDLE-INCOME COUNTRIES AND INNOVATIVE SOLUTIONS FOR EFFECTIVE ENERGY MANAGEMENT IN SMART CITIES

Abstract

Although energy consumption is highly related to economic growth and development finance, a consensus on the direction of causality among them has not been reached. To this end, this study aims to investigate the causal effect of economic growth and development finance on energy consumption with a focus on middle-income countries over the period of 1994-2014. Our empirical highlights unidirectional causality running from economic growth to total energy consumption; unidirectional causality running from financial development to total energy consumption; unidirectional causality running from renewable energy consumption to financial development; and unidirectional causality running from non-renewable energy consumption to economic growth. Based on the empirical findings, the article proposes some innovative solutions for effective energy management in smart cities towards sustainable development, harmonizing economic development and energy consumption.