THE RELATIONSHIP BETWEEN ELECTRICITY CONSUMPTION AND GROSS DOMESTIC PRODUCT IN THE ASSOCIATION OF SOUTHEAST ASIAN NATION COUNTRIES

Abstract

            This study re-examines the relationship between gross domestic product (GDP) and electricity consumption (EC) in ASEAN countries, by using annual time series data from 1980 to 2011. By using a co-integration test, and the system-based reduced rank regression approach (Johansen test), the relationships were tested for long-term equilibrium in all countries. In addition, the Vector Error Correction Model (VECM) technique was applied to study the direction of variables for short-run relationships. It was found that the GDP and EC of Brunei and Viet Nam were co-integrated, while Singapore, Indonesia, Thailand and Myanmar were unable to be identified. In contrast, Philippines, Malaysia, Cambodia, and Laos were not co-integrated. In addition, for Brunei and Vietnam, the long run relationship between GDP and EC only tended toward EC and away from GDP. Therefore, individual governments should promote sufficient power generation to generate electricity matching future growth.