The causal trend of energy intensity and urbanization in emerging countries

Abstract

Due to economic activities intensification associated with the developing countries, the relationship between population density and energy density in urban areas becomes an important issue in the energy studies. In this study, the relationship between energy intensity and urbanization is examined in 23 developing countries (Argentina, Brazil, Chile, China, India, Indonesia, Jordan, Malaysia, Mexico, Nigeria, Pakistan, Peru, Philippines, Hungary, Poland, Romania, Russia, South Africa, Thailand, Tunisia, Turkey, Ukraine, and Uruguay) over the period 1990–2015. The cointegration and causality relationships between variables are examined using Westerlund (2007) cointegration and Dumitrescu and Hurlin (2012) Granger causality tests. The cointegration test results revealed that there is no long-term relationship between variables. However, the Granger causality test results showed that there is a bidirectional causality relationship between energy density and urbanization, energy density and economic growth, economic growth and energy density in the short-term. Thus, the result posit a policy direction that could guide the governments of the respective economies especially on achieving a sustainable environment to avoid feasible consequence of trade-off between energy and population growth.