Husaini, Dzul Hadzwan and Hooi, Hooi Lean
(2015)
Does electricity drive the development of manufacturing sector in Malaysia?
Frontiers in Energy Research, 3 (18).
pp. 1-7.
ISSN 2296-598X
Abstract
This paper investigates the relationship between electricity consumption, output, and
price in the manufacturing sector in Malaysia. We find that electricity consumption,
output, and price are cointegrated in the long run. In addition, it has been found that the
relationship between electricity consumption and output is positive. In the long run, we
find a unidirectional causality from manufacturing output to electricity consumption. This
result indicates that the development of manufacturing sector stimulates greater demand
for electricity. Government needs to make sure that the planning of electricity supply in the
future is in line with the economic development planning to avoid shortage in electricity
supply. In the short run, a unidirectional relationship runs from electricity consumption
to output is found. A decrease of energy usage in production might reduce the output
growth in short run. Hence, we suggest improving the efficiency of electricity usage and
some cost-effective sources of energy.
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