The Impact of Economic Growth, Population, and Infrastructure Development on Electricity Consumption in Chinese Cities: A Comparative Analysis of Coastal and Inland Regions
Research Questions
My final project examines the relationship between economic growth, population dynamics, and infrastructure development in driving electricity consumption in China, comparing two developed coastal cities (Shanghai & Ningbo) with two developing inland provincial capitals (Chengdu & Zhengzhou). The key research questions include:
1. Is economic growth (GDP) the primary driver of electricity demand across cities with different development levels?
2. How does population influence electricity consumption? Is total population more relevant, or does population density play a more significant role?
3. How does road infrastructure expansion impact electricity demand? Does this relationship differ between coastal and inland cities?
4. Do more developed cities exhibit lower electricity consumption growth compared to developing cities?
Data and Methodology
Data Sources
I will use a panel dataset covering the selected cities over the past 20 years, including:
• Electricity consumption (dependent variable)
• GDP
• Population size and density
• Road infrastructure (total road length)
Statistical Techniques
Granger Causality Tests
(1) To examine whether GDP, population, and road infrastructure cause electricity consumption changes or if there is a reverse causality effect.
(2) If GDP Granger-causes electricity consumption, it supports the hypothesis that economic growth drives energy demand.
(3) If electricity consumption Granger-causes GDP, it suggests that energy availability and consumption play a key role in economic growth.
Vector Autoregression (VAR) Model
(1) To analyze dynamic relationships and interdependencies between GDP, population, road infrastructure, and electricity consumption over time.
(2) Helps identify how shocks in one variable (e.g., infrastructure investment) impact electricity demand in the short and long run.
Panel Data Regression (Fixed & Random Effects Models)
(1) To estimate the long-term relationship between electricity consumption and its key drivers while controlling for city-specific factors.
Subsample Comparison & Interaction Terms
(1) To assess whether electricity demand elasticity differs between coastal and inland cities.
Expected Findings
(1) If GDP Granger-causes electricity consumption, this would confirm that economic growth drives energy demand. However, if electricity consumption Granger-causes GDP, it suggests energy availability plays a vital role in economic development.
(2) If population size is significant, but density has a stronger effect, it implies that urbanization and concentrated energy use patterns play a crucial role.
(3) If road infrastructure significantly impacts electricity demand, particularly in inland cities, it could indicate that infrastructure investment facilitates industrial expansion, commercial activity, and residential energy demand.
(4) If electricity consumption stabilizes in coastal cities but continues growing in inland cities, it would suggest an "electricity demand turning point," where more developed economies transition to lower energy-intensity industries.
Policy Implications
• Coastal cities may focus on energy efficiency measures and transitioning towards lower electricity-intensity industries.
• Inland cities may require continued investment in energy infrastructure to support economic growth.
• Understanding the causal relationship between economic factors and energy demand will help guide sustainable urbanization strategies in China.