Determinants of Nuclear Energy Consumption in South Asia: Economic and Energy Security Issues

Abstract

The objective of the study is to examine the causal relationship between i) nuclear energy consumption and economic determinants (i.e. labor force, gross fixed capital formation and GDP per capita), and ii) nuclear consumption and energy security issues (i.e., technology infrastructure, energy sources, conditions of land, concern of energy security and political stability) in the context of South Asia. The study brings an annual aggregate data for South Asia from the period of 1960-2012. The autoregressive distributed lag (ARDL) bounds testing approach employed for investigating the short- and long-run relationship between the variables, while modified version of the Granger causality used for determining the causal relationship among nuclear energy consumption, economic factors and energy security issues. The results show that there is a long-run relationship between nuclear energy consumption, economic indicators and energy security issue; however, the ‘a priori' expectations of the variables differ with the nuclear energy consumption. The results of causality test validate the neutrality hypothesis between i) nuclear energy consumption & labor force; ii) nuclear energy consumption & conditions of land and iii) nuclear energy & GDP per capita. Further, the causality test validates the feedback hypothesis between i) nuclear energy & technology infrastructure; and ii) nuclear energy & energy sources in the region. The results indicate the unidirectional causality running from nuclear energy to gross capital formation but not vice versa. Similarly, energy security Granger cause nuclear energy which indicates that energy security has a vital role to increase nuclear energy in the region.Keywords: Nuclear energy consumption; Economic growth; Energy Security; South Asia.JEL Classifications: C32, Q43