The role of globalization on the recent evolution of energy demand in India: Implications for sustainable development
Using annual data for the period 1971 2012, this study explores the relationship between globalization and energy consumption for India by endogenizing economic growth, financial development and urbanization. The cointegration test proposed by Bayer Hanck (2013) is applied to estimate the long run and short run relationships among the variables. After confirming the existence of cointegration, the overall results from the estimation of an ARDL energy demand function reveal that in the long run, the acceleration of globalization (measured in three dimensions economic, social and overall globalization) leads to a decline in energy demand in India. Furthermore, while financial development is negatively related to energy consumption, economic growth and urbanization are the key factors leading to increased energy demand in the long run. These results have policy implications for the sustainable development of India. In particular, globalization and financial development provide a win win situation for India to increase its economic growth in the long run and become more environmentally sustainable.