Impact of Energy Consumption on Economic Growth of Pakistan

Abstract

Shortfall in the supply of energy resources has significant impact on the economy of a country. Purpose of this paper is to investigate whether energy conservation policies affect economic activities is of great interest in the international debate on impact of energy consumption on economic growth of any country. The data consisting of secondary sources was collected through research journals, Internet statistical database and relevant books. The findings revealed that Pakistan with small manufacturing market, surrounded by major emerging economies like China, India, Malaysia, Indonesia, Philippines and Bangladesh will be worst effected with the rise of energy prices. As a rule of thumb modern day manufacturing industries utilize at least 33% production cost in terms of energy prices. An increase of energy cost will affect their production cost and will force the manufacturers that either to reduce the labor cost or to remain competitive in market by improving the quality standards. Major giants China and India will benefit with this condition and smaller economies will suffer badly. Are our policy makers in Islamabad thinking for the gravity of problem which is now just standing on our door step? Pakistan should focus on the utilization of hydroelectric resources through building of dams such as Kala Bagh Dam, Bhasha Dam etc. to produce cheap electricity. It should improve relations with international and Regional Corporation. It should activate in Thar coal project with the assistance of China to address energy crises. It should adopt new policies to overcome the problem through renewable energy resources i.e solar, wind and tidal energy.