Information and Communication Technology and Electricity Consumption in Transitional Economies

Abstract

The study investigated the impact of information and communication technology (ICT) on electricity consumption in transitional economies using panel data analysis methods (dynamic Generalized Methods of Moments, pooled ordinary least squares, fixed effects, random effects) with annual secondary data ranging from 1995 to 2014. Majority of prior studies on the subject matter had not focused on the impact of ICT on electricity consumption but on energy consumption, which is a broader area. They also did not focus exclusively on transitional economies and they ignored both the dynamic characteristics of electricity consumption data and endogeneity issues. The study revealed that electricity consumption is positively and significantly influenced by its own lag, in line with theoretical literature (Nayan et al., 2013). However, the impact of ICT on electricity consumption was found to be mixed. For example, the influence of ICT on electricity consumption was found to be negative and non-significant under the dynamic GMM and pooled OLS. Fixed and random effects observed that ICT had a significant positive impact on electricity consumption in emerging markets. It is against this backdrop that the current study urges transitional economies to develop and implement policies that ensures that ICT gadgets being used reduces the quantity of electricity consumption. In other words, transitional economies should focus on developing or importing energy efficient ICT gadgets in order to meet the required energy saving threshold levels. Future studies should investigate channels through which ICT influences electricity consumption, in line with Shahbaz et al (2014) whose study noted that the relationship between ICT and electricity consumption is non-linear.Keywords: ICT; Electricity Consumption; Panel Data; Transitional EconomiesJEL Classifications: L17, Z32DOI: https://doi.org/10.32479/ijeep.8143