Understanding the link between energy poverty and economic growth in Latin America

Abstract

An Autoregressive Distributed Lag (ARDL) model and panel techniques were used to analyze the long-run and the short-run relationship between energy poverty and economic growth for nine Latin American countries for the period 1990-2018. The panel data analysis results confirmed cointegration between the variables, supporting the relevance of energy poverty for economic development in the studied countries. From an ARDL Pooled Mean Group (PMG) estimation, a significant effect from energy poverty to economic development, in the long run, is proved, meaning that improvements in energy access led to increases in economic growth. The long-run homogeneity among countries could imply that, in the long term, political measures to overcome energy poverty should be adopted and coordinated in a homogeneous manner throughout the Latin American studied region while in the short-run, particular country policies are needed to increase levels of energy access. Then, according to the empirical evidence, public and private institutions need to implement initiatives to overcome energy poverty by promoting equal access to reliable, sustainable, accessible, healthy, and sufficient energy, and coordinated efforts in the region could lead to stronger results in the long run.