The Relationship between Electric Power Consumption, Foreign Direct Investment and Economic Growth in Sri Lanka

South Asian Journal of Social Studies and Economics

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Title The Relationship between Electric Power Consumption, Foreign Direct Investment and Economic Growth in Sri Lanka
 
Creator Maheswaranathan, S.
 
Description Purpose: This paper investigates the long run relationship between electricity consumption, foreign direct investment and economic growth in Sri Lanka.
Design/Methodology/Approach: The annual time series data over the period 1970–2017 is considered to this study. Augmented Dickey–Fuller (ADF) unit root analysis is employed for examining the stationary properties of the variables. Consequently, Autoregressive Distributed Lag (ARDL) analysis is employed to examining the short- run and long-run relationship between electricity consumption, foreign direct investment and economic growth in Sri Lanka. Further, this study used the diagnostic tests such as the residual normality test, heteroskedasticity and serial autocorrelation tests for misspecification to validate the parameter estimation outcomes achieved by the estimated model. CUSUM test is applied to test the stability of the model. Collected data were analyzed using STATA version 15.
Findings: The findings of the bound test confirm that the variables are cointegrated. Further the results reveal that there is a statistically positive significant relationship between electricity consumption, foreign direct investment and economic growth in Sri Lanka in the long run and short term. The empirical finding reveals that one percent increase in electricity consumption and foreign direct investment increases the GDP by 1.5 percent and 12.9 percent in the long run respectively.
 
Publisher South Asian Journal of Social Studies and Economics
 
Date 2020-02-28
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
 
Format application/pdf
 
Identifier https://journalsajsse.com/index.php/SAJSSE/article/view/30158
10.9734/sajsse/2020/v6i130158
 
Source South Asian Journal of Social Studies and Economics; 2020 - Volume 6 [Issue 1]; 21-31
2581-821X
 
Language eng
 
Relation https://journalsajsse.com/index.php/SAJSSE/article/view/30158/56587
https://journalsajsse.com/index.php/SAJSSE/article/view/30158/56588
 
Rights Copyright (c) 2020 © 2020 Maheswaranathan; This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
 

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