The nexus between energy consumption and financial development: estimating the role of globalization in Next-11 countries

• Published in: Environmental science and pollution research international 2018-07, Vol.25 (19), p.18651-18661
• Main Authors: Danish, Saud, Shah, Baloch, Muhammad Awais, Lodhi, Rab Nawaz
• Format: Article
• Language: English
• Subjects: Aquatic Pollution; Atmospheric Protection/Air Quality Control/Air Pollution; Conservation of Energy Resources - economics; Conservation of Energy Resources - trends; Data processing; Developed countries; Developed Countries - economics; Developing Countries - economics; Earth and Environmental Science; Economic development; Economic Development - trends; Economic growth; Economic models; Economics; Ecotoxicology; Empirical analysis; Energy consumption; Energy demand; Energy policy; Environment; Environmental Chemistry; Environmental Health; Environmental science; Globalization; Humans; International Cooperation; Public Policy; Research Article; Waste Water Technology; Water Management; Water Pollution Control
• ISSN: 0944-1344; 1614-7499
• DOI: 10.1007/s11356-018-2069-0

In the modern era of globalization, the economic activities expand with the passage of time. This expansion may increase demand for energy both in developing and developed countries. Therefore, this study assesses the impact of financial development on energy consumption incorporating the role of globalization in Next-11 countries. A group of panel estimation techniques is used to analyze the panel data and time series data for the time 1990–2014. The empirical results of the study suggest that financial development stimulates energy consumption. Also, globalization increases demand for energy consumption, although the single country analysis suggests that the effect of globalization on energy demand is heterogeneous among N-11 countries. Furthermore, feedback hypothesis is confirmed between financial development and energy consumption. Also, bidirectional causality is found between economic growth and energy consumption. The findings urge for the attention of policymaker in emerging countries to develop a strategy to reduce the consequences of energy consumption by controlling resource transfer through globalization to the host country and by adopting energy conversation policies.