Energy use, real output‐growth, FDI, energy‐intensity and CO2 emission; the case of Kazakhstan

• Published date: 01 February 2022
• Author: Isah Wada,Alimshan Faizulayev,Amir Hossein Khademolomoom,Ahmad Alzubi
• Date: 01 February 2022
• DOI: http://doi.org/10.1002/pa.2300

ACADEMIC PAPER

Energy use, real output-growth, FDI, energy-intensity and CO

2

emission; the case of Kazakhstan

Isah Wada

1

| Alimshan Faizulayev

2,3

| Amir Hossein Khademolomoom

1

|

Ahmad Alzubi

1

1

Institute of Social Sciences, University of

Mediterranean Karpasia, Lefkos¸a, Turkey

2

Research and Development Department,

Almaty Management University, Almaty,

Kazakhstan

3

Kimep University, Almaty, Kazakhstan

Correspondence

Isah Wada, Institute of Social Sciences,

University of Mediterranean Karpasia, S¸ht.M.

Ruso Cad. No. 79, Belyaka Sk, North Cyprus

via Mersin 10, Lefkos¸a, Turkey.

Email: isah.wada@akun.edu.tr

The study investigates asymmetries in energy use, real output growth, FDI, energy

intensity and CO

2

emission in Kazakhstan. The linear ARDL approach of Pesaran

et al. (2001. Journal of Applied Econometrics, 16(3), 289–326) was adopted following

Aslan (2014. Energy Sources,Part B:Economics,Planning,and Policy,9,25–31) to

examine the causality between energy use and real output within a simple model.

Subsequently, in line with Ndoricmpa (2017. Energy,125, 543–551), the Shin et al.

(2014. Festschrift in honour of Peter Schmidt. New York, NY: Springer Science & Busi-

ness Media) non-linear ARDL asymmetric specification was followed to analyse the

dynamic asymmetries amongst the estimated variables—in an extended model.

Annual time series data expressed in natural logarithm from 1992 to 2016 was uti-

lized for the study. ARDL model established a long-run relationship between energy

use and real output in Kazakhstan. The modified Granger causality test confirms uni-

directional causality from real output to energy use—suggestive that energy conser-

vation hypothesis is supported. In the estimated NARDL model, no empirical evi-

dence exist yet-in support of the ‘pollution haven’hypothesis and energy-related

CO

2

induced emission in Kazakhstan whereas asymmetry exists in energy intensity.

1|INTRODUCTION

Energy—whilst been a significant factor in economic growth often

leads to population and environmental degradation—raising concerns

about global warming and climate change. Thus, about 2/3rd emis-

sions in global green-house gas are directly due to global energy pro-

duction and energy use (IEA, 2017). This stresses the importance of

decoupling economic growth from energy-induced emissions. The

IEA (2017) report shows that growth in energy-related emissions

slowed considerably to about 8% reaching nearly 34.4 gigatonnes in

relation to projected growth in the global economy from 2013 to

2030. The scenario is attributed to ‘energy-productivity bonus’due to

declining energy intensity in global output productivity. Hence growth

in energy efficiency—declining energy intensity—is helping to reshape

the world energy system. Empirical studies also highlight the role of

foreign direct investment (FDI) in facilitating and promoting energy

efficiency—via its diffusion of clean technology, competition and

knowledge-transfer channels, respectively. The current study seeks to

analyse the asymmetries in the interaction amongst energy use, real

output, energy intensity, foreign direct investment (FDI), and CO

2

emission in Kazakhstan. This study contributes to the empirical litera-

ture on the dynamic interactions amongst the adopted variables in the

context of energy-economic growth-environmental sustainability

nexus from two perspectives. Firstly, the asymmetric approach

followed in the current study makes it unique—empirical evidence

points to unobserved asymmetries in time series data which biases

the results of estimated models (Hatemi-J, 2012). Secondly, the

adopted asymmetric approach implicitly allows us test the ‘pollution

haven’and ‘environmental Kuznets’hypothesis for Kazakhstan. Our

motivation stems from the observation that most study neglects or

ignores such asymmetries. Thus, to our best knowledge, this study

seems unparalleled in relation to Kazakhstan in term of its subject

matter. The choice of the current study for Kazakhstan is motivated

by the significance of the country within its geographical region. The

country remains a top production area for coal, crude oil resources

and natural gas—hence a huge energy exporting nation. Despite this,

Received: 17 February 2020 Revised: 29 April 2020 Accepted: 17 July 2020

DOI: 10.1002/pa.2300

J Public Affairs. 2022;22:e2300. wileyonlinelibrary.com/journal/pa © 2020 John Wiley & Sons Ltd 1of8

https://doi.org/10.1002/pa.2300