Nexus Among Energy Consumption, Financial Development, Trade Openness and Economic Growth: Evidence from South Asian Countries

Abstract

Energy is the economy's oxygen and the lifeblood of progress, particularly in developing economies that are undergoing widespread industrialization. In growth theories, it is frequently suggested that energy, like labor and capital, should be regarded as inputs. The current study aims to look into this contrivance in the context of the South Asian countries. Panel data has been utilized for Pakistan, Bangladesh, India, Sri Lanka, and Nepal. To go through investigation, panel co-integration and panel fully modified ordinary least square (FMOLS) were utilized. The results of panel co-integration show that variables have long run relationship. Results of the FMOLS show that consumption of energy, trade openness, and financial development all altogether affect economic growth in the countries under consideration. The results of panel homogenous causality uncover that economic growth and energy consumption have unidirectional causality, with energy consumption stimulating economic growth.