Does electricity drive the development of manufacturing sector in Malaysia?

Dzul Hadzwan, Husaini and Hooi, Hooi Lean (2015) Does electricity drive the development of manufacturing sector in Malaysia? Frontiers in Energy Research, 3 (8). ISSN 2296-598X

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Abstract

This paper investigates the relationship between electricity consumption, output, and price in the manufacturing sector in Malaysia. We find that electricity consumption, output, and price are cointegrated in the long run. In addition, it has been found that the relationship between electricity consumption and output is positive. In the long run, we find a unidirectional causality from manufacturing output to electricity consumption. This result indicates that the development of manufacturing sector stimulates greater demand for electricity. Government needs to make sure that the planning of electricity supply in the future is in line with the economic development planning to avoid shortage in electricity supply. In the short run, a unidirectional relationship runs from electricity consumption to output is found. A decrease of energy usage in production might reduce the output growth in short run. Hence, we suggest improving the efficiency of electricity usage and some cost-effective sources of energy.

Item Type: Article
Uncontrolled Keywords: electricity consumption, manufacturing output, granger causality, bounds testing for cointegration, unimas, university, universiti, Borneo, Malaysia, Sarawak, Kuching, Samarahan, ipta, education, research, Universiti Malaysia Sarawak
Subjects: H Social Sciences > HF Commerce
T Technology > TS Manufactures
Divisions: Academic Faculties, Institutes and Centres > Faculty of Economics and Business
Depositing User: Karen Kornalius
Date Deposited: 10 Aug 2016 22:18
Last Modified: 10 Aug 2016 22:18
URI: http://ir.unimas.my/id/eprint/12884

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