Conclusion, limitations and directions for future research
This paper has employed annual data for Malaysia from 1970 to
2008 to examine the causal relationship between economic
growth, electricity generation, exports and prices in a multivariate
model. The first major finding of the study is that there is unidirectional
Granger causality running from economic growth to
electricity generation. The second major result is that neither the
export-led nor handmaiden theories of trade are supported. The
third main finding is that there is no causal relationship between
prices and economic growth. The policy implication of this result is
that electricity conservation policies, including efficiency
improvement measures and demand management policies, which
are designed to reduce the wastage of electricity and curtail
generation can be implemented without having an adverse effect
on Malaysia’s economic growth.
In terms of future research, there has been some interest in
Malaysia in exploring the potential for combining non-renewable
and renewable sources of energy (see [53] for full details). A limitation
of this study is that we do not differentiate between
renewable and non-renewable energy consumption. This is one
direction for future research following the approach in, for example,
Payne [40] who examines this issue for the United States.
Different industries have different intensities of energy, and
over time the importance of a specific industry will change.
Another limitation of this study is that the analysis is at an aggregated
level. Future studies could follow the approach in studies
such as [35,38] and examine the relationship between energy use
and GDP at a disaggregated level in Malaysia. A third avenue for
future research could be to conduct similar studies for Malaysia’s
Asian neighbours, such as China and India, either on their own or as
part of a panel study. Such studies could have important policy
implications, particularly if carbon dioxide emissions were added
as another variable in the VAR framework.