Information and Communication Technology, electricity consumption and economic growth in OECD countries: A panel data analysis

Abstract

This study estimates the short- and long-run effects of Information and Communication Technology (ICT) use and economic growth on electricity consumption using OECD panel data for the period of 1985-2012. The study employs a panel unit root test accounting for the presence of cross-sectional dependence, a panel cointegration test, the Pooled Mean Group Regression technique and Dumitrescu-Hurlin causality test. The results confirm that both ICT use and economic growth stimulate electricity consumption in both the short- and the long run. Causality results suggest that electricity consumption causes economic growth. Both mobile and Internet use cause electricity consumption and economic growth. The findings imply that OECD countries have yet to achieve energy efficiency gains from ICT expansion. Effective coordination between energy efficiency from ICT policy and existing emissions reduction policies have the potential to enable OECD countries reduce environmental hazards arising from electricity consumption for ICT products and services. Introducing green IT and IT for green are also recommended as potential solutions to curb electricity consumption from ICT use especially in the data centers.