Abstract

Nowadays, most analysts agree that energy is crucial for the global economic output, as it constitutes the backbone of international economy. Global trade, industry and ultimately our current lifestyle could not be maintained without it. As the world economy improves and new opportunities are created, it is expected that energy demand will increase significantly in the future. In recent decades, its significant role is understood by a lot of business sectors and academics, who investigate systematically the relationship between energy and economic development.

The objective of this study is to examine the causal relationship between energy consumption and economic activity.

More specifically, in the first part of the study the basic goal is the brief presentation of the indices that will be used to define and understand the term of economic growth and the contribution of energy in the process of economic development, and the second part presents the panel data econometric investigation of statistical package Stata with a view to investigate the existence or non existence of a causal relationship between the variable energy consumption and economic growth. The empirical analysis is performed along a check. Specifically, the set of test examines whether the consumption of electricity affects economic growth. The analysis focuses on a specific sample of countries comprising the 28 member states of the European Union. In addition it is significant to underline that for this econometric approach the economic development will be expressed through the human development index (HDI for consecutive years from 2010 to 2014), which is the most widely used measure of development, while in terms of energy, the variable is the per capita electricity consumption (EPC for consecutive years from 2010 to 2014).

While there is a long tradition in economics of development, in the last few years the term “economic development” has become part of our daily lives. Sustainable, green, urban, regional are just some of the characterizations we’ve seen, in various publications, articles, books and statements of personalities of the political, economic and academic space, to accompany the development. What do we mean by ‘economic development’ and why the last few years it has gained so much importance?