• ISSN: 2301-3567 (Print), 2972-3981 (Online)
    • Abbreviated Title: J. Econ. Bus. Manag.
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    • DOI: 10.18178/JOEBM
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HOME > Archive > 2020 > Volume 8 Number 3 (Aug. 2020) >
JOEBM 2020 Vol.8(3): 235-240 ISSN: 2301-3567
DOI: 10.18178/joebm.2020.8.3.643

The Relationship between Economic Growth and Electricity Consumption in Sri Lanka

K. K. C. S. Kiriella, W. L. T. Peiris, W. H. A. Samarakoon, K. T. A. B. Samarasinghe, W. D. A. S. Wijayapala, and M. P. Dias

Abstract—This paper applies to Sri Lanka an econometric model named as Vector Error Correction Model (VECM) and simple econometric model developed by H.Y. Yang (2000) which can be used for testing the presence of the relationship between economic growth and electricity consumption in Sri Lanka for the period of 1985-2015. The results obtained from the research can be used to justify the investments in electricity sector because of the significant contribution it makes to the economy and the macro economic planning. The research has been separated into four scenarios in order to check the impact to the economic growth from different sectors (Total electricity consumption and total real GDP, Industrial sector electricity consumption and industrial Sector real GDP, Commercial sector electricity consumption and service sector real GDP, [Industrial + Commercial] sector electricity consumption and [Industrial + Service] sector real GDP). The economic output generated from [Industrial + Commercial] sector has a strong relationship with [Industrial + Service] sector electricity consumption. Also, the results obtained suggests that the past and the current electricity consumptions have a significant impact to the economic growth in Sri Lanka.

Index Terms—Economic growth, electricity consumption, simple econometric model, Sri Lanka, vector error correction model.

K. K. C. S Kiriella, W. H. A Samarakoon, and K. T. A. B Samarasinghe were with the University of Moratuwa, Sri Lanka; are now with private sector, Sri Lanka (e-mail: chandikasudul@gmail.com, warunahasun@gmail.com). W. L. T. Peiris is with Government University, Sri Lanka (e-mail: lemashap@tech.sab.ac.lk). M. P. Dias was with University of Moratuwa, Sri Lanka. W. D. A. S Wijayapala is with University of Moratuwa, Sri Lanka.

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Cite:K. K. C. S. Kiriella, W. L. T. Peiris, W. H. A. Samarakoon, K. T. A. B. Samarasinghe, W. D. A. S. Wijayapala, and M. P. Dias, "The Relationship between Economic Growth and Electricity Consumption in Sri Lanka," Journal of Economics, Business and Management vol. 8, no. 3, pp. 235-240, 2020.

Copyright © 2020 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

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