The impact of electric power consumption on economic growth: a case study of Portugal, France, and Finland

Energy plays a vital role in promoting sustainable economic development in complex societies. This study has analyzed the impact of electricity consumption on three European Union member countries’ economic growth, i.e., Portugal, France, and Finland, caring structural breaks in cointegration analyses. The empirical results indicate a positive impact of electric power consumption on economic growth in the long and short run in Finland and Portugal and in the long run in France. The findings also highlight the positive and significant role of the labor force in boosting economic growth in the long and short run in France and Finland. However, it shrinks economic growth in the long run in Portugal. The study discloses the positive role of capital in the long run in the case of Portugal. Similar results are found in all three countries in the short run. Moreover, the study diagnoses a bidirectional causal relationship between economic growth and electric power consumption in Finland in the long and short run and in France in the long run. A growth-promoting or electricity-led growth hypothesis is found in Portugal. By simulating the mean values of electric power consumption, economic growth follows an increasing trend in all the countries. Hence, electric power consumption has appeared an essential factor in elevating economic growth in all three selected countries. Based on these results, this study suggests that the provision of electricity supply ventures may be expanded in the selected EU member countries in order to enhance economic growth. The study also suggests that emphasis should be shifted from non-renewable energy sources to renewable energy sources to ensure the provision of clean energy to all the public under the umbrella of sustainable development goals of 2030. Hence, the present study contributes to achieving sustainable economic growth in the selected EU member countries.