A disaggregated approach to analysing the effects of globalization and energy consumption on economic growth: New insights from low-income countries

This study examines the impacts of globalization and energy consumption on economic growth in 10 low-income countries during the 1990-2017 period. It also determines the causal relationship between globalization and energy consumption. It disaggregates overall globalization into economic, social, and political dimensions, as well as disaggregates total energy consumption into renewable and non-renewable energy. It employs the Fully Modified Ordinary Least Squares, Instrumental Variables approach, and Dumitrescu-Hurlin Granger non-causality technique to account for heterogeneity, endogeneity and cross-sectional dependence. The results show that overall globalization has a positive impact on economic growth in low-income countries. But when it disaggregates globalization into economic, social and political dimensions, the results reveal that social and political dimensions boost economic growth while economic dimension undermines economic growth. Moreover, the results show that energy consumption is a significant determinant of economic growth. But when it disaggregates energy consumption into renewable and non-renewable energy, the results reveal that non-renewable energy consumption has a positive impact on economic growth, while the impact of renewable energy consumption is tenuous. The results also show a unidirectional causality from globalization to energy consumption, suggesting that globalization enhances energy consumption. This study implies that overall globalization and total energy consumption are significant determinants of economic growth, Therefore, efforts to accelerate economic growth should incorporate both globalization and energy consumption in low-income countries. However, low-income countries should appraise the dimensions of globalization and energy consumption that are not growth-enhancing with a view to making them drivers of economic growth.