This study summarises current economic literature that attempts to
analyse the relationship between electricity access/availability and
economic growth. According to the extensive literature review that was
conducted for this purpose, there is a strong causal relationship
between the two variables, but there is no consensus regarding the
direction of the causality. There is also inconclusive evidence on the
impact of higher availability of modern energy services on poverty
reduction and income equality.
The study also explores how energy policies have contributed to the
development of the energy and economic growth. Deregulation, energy
conservation and clean energy policies such as energy efficiency and
renewable energy were found to have a positive macroeconomic impact,
while according to the literature, energy subsidies are likely to cause
fiscal imbalances and discourage investment in the energy sector.
This report has been produced by Economic Consulting Associates for
Evidence on Demand with the assistance of the UK Department for
International Development (DFID) contracted through the Climate,
Environment, Infrastructure and Livelihoods Professional Evidence and
Applied Knowledge Services (CEIL PEAKS) programme, jointly managed by
HTSPE Limited and IMC Worldwide Limited.
Economic Consulting Associates. Correlation and causation between energy development and economic growth. Evidence on Demand, UK (2014) 32 pp. [DOI: http://dx.doi.org/10.12774/eod_hd.january2014.eca]