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Relationship among electricity consumption, GDP, CPI and FDI investment
(University of Management and Technology Lahore, 2017) Farhan, Ahmed
The Purpose and aim of this study is to investigate the relationship between electric power consumption, Economic Growth (GDP), Consumer Price Index (CPI) and Foreign Direct Investment (FDI) in ‘Pakistan and BRIC countries’, by applying Cointegration technique’ for the period 1990-2015. Johnsen Cointegration for long- run and Vector Error Correction Model for a short-run relationship have been applied to find out the relationship of the variables mentioned above. ‘Granger Causality test’ is also applied to find any cause among variables of this study. The results observed and obtained from tests of cointegration settle that different countries depict different relationships in long-run and short-run. Although all of Pakistan, Brazil, Russia, India & China show ‘long-run relationship’ in the study. Yet, the reasons for the short-run relationship differ. For instance, in case of China; it is shown that she must practice, such policies, which increase ‘Foreign Direct Investment’ to prompt ‘Electricity consumption’. Furthermore, the findings of the study indicate that policymakers should adopt and implement policies keeping in view the country-specific ground facts and causing the behaviour of variables in this causal relationship study