Globalization and Energy Consumption: Empirical Implications for Income Inequality in Developing Countries

Abstract

The objective of this study is to envisage the impact of globalization and energy consumption on income inequality in developing countries. The specific objectives are to discover the impact of economic, social, political, and overall globalization along with energy consumption on income inequality. To attain the empirical outcomes, this study employed the System-GMM on a panel dataset from 1996 to 2018 in a sample of sixty-nine developing countries as per the classification of World Bank. To further validate the empirical outcomes different interaction terms between overall globalization and energy use, political globalization and energy consumption, social globalization and energy consumption are all regressed on income inequality. The main finding of this study is that income inequality is positively affected by globalization and is statistically significant. This research also discovered a negative correlation between energy consumption and income inequality. The study suggests that developing nations should adopt policies to open their markets to the entire world, make effective use of globalization, and promote policies that reduce income inequality.