Natural gas, trade and sustainable growth: empirical evidence from the top gas consumers of the developing world

Md. Samsul Alam, Sudharshan Reddy Paramati (Lead / Corresponding author), Muhammad Shahbaz, Mita Bhattacharya

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    25 Citations (Scopus)

    Abstract

    Natural gas is the key non-renewable source of energy for a low-carbon economy. The research applies heterogeneous panel techniques to investigate the impact of natural gas consumption on economic growth across a panel of top 15 natural gas consumers of the developing world. We establish long-run dynamics with cross-sectional dependence and heterogeneity across the sample countries. The long-run output elasticities suggest that the natural gas consumption and trade variables have significant positive effect on the output in a panel of developing economies. Further, we establish feedback relationship among gas consumption, output and trade in the short-run. Given the significance of natural gas as the low-emission source of energy, we suggest governments and policy advisers of these major natural gas consumers to focus on developing pipeline infrastructure for adequate supply, reforming natural gas sector with a competitive price structure to combat excess demand in individual natural gas market. With trade integration, majority of these countries need to incorporate these initiatives to improve the technologies such as combined cycle power plant technology and value-added chemical production technology to achieve sustainable economic growth.

    Original languageEnglish
    Pages (from-to)635-649
    Number of pages15
    JournalApplied Economics
    Volume49
    Issue number7
    Early online date1 Jul 2016
    DOIs
    Publication statusPublished - 2017

    Keywords

    • cross-sectional dependence
    • developing economies
    • heterogeneity
    • Natural gas consumption
    • sustainable economic growth
    • trade

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